Term
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Definition
| a market with a single firm that produces a good or service for which no close substitute exists and that is protected by a barrier that prevents other firms from selling that good or service |
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Term
| Monopoly arises for two key reasons |
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Definition
1. No close substitute
2. Barrier to entry |
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Term
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Definition
| A constraint that protects a firm from potential competitors. |
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Term
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Definition
| a market in which economies of scale enable one firm to supply the entire market at the lowest possible cost. |
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Term
| Examples of natural monopoly |
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Definition
| firms that deliver gas, electricity, and water |
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Definition
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Term
| Ownership Barrier to Entry |
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Definition
| barrier that arises if one firm owns a significant portion of a key resource. |
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| De Beers owning 90% of the world's supply of diamonds |
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Definition
| An example of an ownership barrier to entry |
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Term
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Definition
| a market in which competition and entry are restricted by the granting of a public franchise, government license, patent, and copyright. |
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Term
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Definition
an exclusive right granted to a firm to supply a good or service.
ex) US postal service |
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Term
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Definition
controls entry into particular occupations, professions, and industries
ex) occurs in medicine, law, dentistry, schoolteaching, architecture... |
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Term
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Definition
an exclusive right granted to the inventor of a product or service
encourages the invention of new products and production methods
stimulates innovation by encouraging inventors to publicize their discoveries and offer them for use under license |
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Term
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Definition
| an exclusive right granted to the author or composer of a literary, musical, dramatic, or artistic work |
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Term
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Definition
| How long is a patent valid in the US? |
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Term
| A monopoly sets its own price |
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Definition
| What is the difference between a monopoly and competition? |
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Term
Single Price
Prive discrimination |
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Definition
| What are two monopoly situations that create two pricing strategies |
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Term
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Definition
a firm that must sell each unit of its output for the same price to all its customers
ex) De Beer's diamonds |
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Term
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Definition
| when a firm sells different units of a good or service for different prices |
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