Non-competitive Markets (Monopoly and Oligopoly) Flashcards

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What is a monopoly?

A market with one firm as the only seller.

A market with a few large firms that dominate sales.

Each firm’s choices affect its rivals, so firms watch and react to each other.

It faces little or no competition, so it can set its price.

They make it hard for new firms to enter, which keeps power with big firms.

When rival firms agree to fix prices, share markets, or limit output.

A group of firms that collude to act like one seller; it is illegal in the UK.

Firms fear price wars and watch rivals, so they keep prices steady.

Competing using adverts, branding, design, or service instead of cutting price.

Higher prices and less choice.

Lower prices if economies of scale are passed on to customers.

A market where one firm can supply the whole market at lower cost than two or more firms. This is due to very high fixed costs, like water pipes.