Imperfect Competition

Vocabulary

cartel

a group of producers who collude to restrict output, maintain high prices, and maximize their joint profit

concentration ratio

the percentage of market share controlled by a given number of firms

duopoly

an oligopoly in which only two large firms dominate the market

monopolistic competition

a market structure in which many firms, each with a low degree of market power, produce similar but differentiated products

oligopoly

a market structure of imperfect competition in which a few large firms, each with a degree of market power, sell either standardized products or differentiated products

price war

a competition in which one firm lowers its prices to undercut the other firm and thereby steal its business; then, in response, the other firm lowers its prices even more, and so on

product differentiation

the creation of distinguishing characteristics for a product so that competing products are not regarded as perfect substitutes for each other

quota

the maximum amount of a good that can be imported by law

tariff

a fee exacted from the importing of a good