An organization of sellers designed to coordinate supply decision so that
the joint profits of the members will be maximized. A cartel
will se to create a monopoly in the market.
Agreement among firms to avoid various competitive practices,
particularly price reductions. It may involve either formal
agreements or merely tacit recognition that competitive
practices will be self defeating in the long-run. Tacit
collusion is difficult to detect. The Sherman Act prohibits
collusion and conspiracies to restrain interstate trade.
The total sales of the four (or sometimes eight) largest firms in an
industry as a percentage of the total sales of the industry. The
higher the ratio, the greater is the market dominance of a small
number of firms. The ratio can be seen as a measure of
oligopolistic power.
The combining under one ownership of two or more firms that produce
unrelated products.
Products distinguished from similar products by such characteristics as
quality, design, location, and method of promotion.
The combining under one ownership of the assets of two or more firms
engaged in the production of similar products.
A demand curve that is highly elastic for a price increase but inelastic
for a price reduction. These differing elasticities are based on
the assumption that rival firms will match a price reduction but
not a price increase.
The ability of a firm that is not a pure monopolist to earn unusually
large profits, indicating that it has some monopoly power.
Because the firm has few (or weak) competitors, it has a degree
of freedom from the discipline of vigorous competition.
A situation in which there are a large number of independent sellers,
each producing a differentiated
product in a market with low barriers to entry.
Construction, retail sales, and service stations are good
examples of monopolistically competitive industries.
A market situation in which a small number of sellers comprise the entire
industry. It is competition among the few.
The creation of a single firm from two firms, one of which was a supplier
or customer of the other-for example, a merger of a lumber
company with a furniture manufacturer.
