Monopoly Power

Vocabulary

anti-monopoly policy

policy designed to curb their excesses to deter monopolies from abusing their market power

antitrust law

in the United States, a law designed to restrict monopolies and encourage competition in markets

barrier to entry

legal, economic, or political barrier that prevents or obstructs the entry of new firms into a market and limits the amount of competition that existing firms must face

break-even price

the lowest price that a firm can charge and still cover its average total costs

copyright

the legally provided right of an artist and their estate to profit from their work for the life of the artist plus 70 years, or even plus 120 years

economies of scale

the observation that a firm's long run average total costs decrease as production levels increase

innovation

the economic application of a new idea, which could be a new or modified product, production process, or method of organizing a business

legal barrier

government-created barrier to entry, such as a patent, copyright, trademark, or license

license

official permission to conduct an activity, which governments can use to create a barrier to entry by restricting availability

market power

the ability of a supplier to set the market price and control the amount of the good/service available to consumers

market structure

the features that may affect the behavior and performance of firms in a market

monopolist

a supplier that has a monopoly over the provision of a good/service

monopolistic competition

a market structure of imperfect competition in which the suppliers have a low degree of market power and sell differentiated products

monopoly

a market structure in which one company is the only supplier of a good or service for which there are no close substitutes

natural monopoly

a monopoly created and preserved because economies of scale make production by a single large firm the most cost-effective way of producing

network effect

the increase value when one good/service is used by the majority of consumers in the market

normal profit

the situation when a firm's total costs and total revenue are equal

patent

the exclusive rights of an inventor to use (or allow others to use) their invention, which creates a temporary monopoly, typically 20 years from the time of submission for the patent

price discrimination

the practice of charging different prices for the same product in different markets

price-taker

a participant in a perfectly competitive market; whatever price the market will bear is the price at which the price-taker must sell

strategic pricing

ability of the monopolist to reduce the market price in order to keep competitors from succeeding

trademark

a symbol, word, or words legally registered or established by use as representing a company or product