Perfect Competition: an ideal market structure in which buyers, or consumers, and sellers, or producers, each compete directly and fully under the laws of supply and demand.
Buyers: consumers.
Sellers: producers.
Monopoly: market structure in which one seller controls all production of a good or service.
Monopolistic Competition: differs from perfect competition in one key respect--sellers offer different, rather than identical, products.
Product Differentiation: sellers in monopolistic competition try to differentiate, or point out differences, between their products and those of their competitors.
Nonprice Competition: sellers compete on a basis other than price.
Oligopoly: market structure in which a few large sellers control most of the production of a good or service.
Market considered an oligopoly when the largest three or four sellers produce most--perhaps 70 percent or more--of the market's total output.
Interdependent Pricing: being very responsive to, or dependent on, the pricing actions of their competitors.
Price Leadership: the most common form of interdependent pricing in which one of the largest sellers in the market takes the lead by setting a price for its products.
Price War: situation a failed pricing policy may spark in which sellers aggressively undercut each other's prices in an attempt to gain market share.
Collusion: when sellers secretly agree to set production levels or prices.
Cartel: companies openly organize a system of price setting and market sharing.
Natural Monopolies: feature a single large seller that produces a good or service most efficiently.
Economies of Scale: the seller's large scale, or size, allows it to use its human, capital, and other resources more efficiently and economically than if those resources were divided among several smaller producers.
Geographic Monopolies: monopoly that forms because a market's potential profit is so limited by its geographic location that only a single seller decides to enter the market.
Technological Monopolies: monopoly that developed when a producer develops new technology that enables the creation of a new product or that changes the way an existing product is made.
Patent: grants a company or an individual the exclusive right to produce, use, rent, and sell an invention or discovery for a limited time--17 years in the U.S.
Government Monopolies: any market in which a government is the sole seller of a product.
Trusts: huge monopolies that dominated the marketplace.
Laissez-Faire: philosophy that states that economic systems prosper when the government does not interfere with the market in any way.
Antitrust Legislation: acts designed to monitor and regulate big business, prevent monopolies from forming, and dismantle existing monopolies.
Price Discrimination: the practice of offering different prices to different customers under the same circumstances.


Four Conditions of Perfect Competition:
-Many buyers and sellers act independently.
-Sellers offer identical products.
-Buyers are well informed about products.
-Sellers can enter or exit the market easily.

Three Conditions of an Oligopoly:
-There are only a few large sellers.
-Sellers offer identical or similar products.
-Other sellers cannot enter the market easily.

Three Conditions of a Monopoly:
-There is a single seller.
-No close substitute goods are available.
-Other sellers cannot enter the market easily.

Types of Monopolies:
-Natural Monopolies
-Geographic Monopolies
-Technological Monopolies
-Government Monopolies

Monopolies at Work:
-Consumer Demand
-Potential Competition
-Government Regulation

Antitrust Policy in Recent Decades:
Interstate Commerce Act- created the Interstate Commerce Commission to oversee railroad freight business.
-Sherman Antitrust Act- prohibits any agreements, contracts, or conspiracies that would restrain interstate trade or cause monopolies.
-Clayton Antitrust Act- clarified and strengthened the Sherman Antitrust Act by prohibiting price discrimination, local price cutting, mergers that reduce competition, and exclusive sales contracts.
-Federal Trade Commission Act- created the Federal Trade Commission to investigate charges of unfair methods of competition and commerce.
-Robinson-Patman Act-protected small retail businesses by prohibiting wholesalers from charging small retailers higher prices than they charged large retailers and by prohibiting large retailers from setting artificially low prices.
-Celler- Kefauver Act- amended the Clayton Act to prohibit corporate acquisitions when they substantially decrease competition.
-Antitrust Procedures and Penalties Act: increased penalties for violating antitrust laws.
-Parebs Patriae Act: gave states the right to sue companies on behalf of citizens harmed by the company's antitrust violation.

Connection to everyday life:**
Monopolies in everyday life---->>>
  • Public utilities (gas, water, cable TV)
  • Local telephone service companies
  • Professional Sports Teams
Example of Nonprice Competition:
Designer Jeans vs. "No-Name" Jeans
Toys R Us
U.S. Government Monopolies:
The building and maintenance of roads, bridges, and canals in the U.S.
Theodore Roosevelt and William Howard Taft both made "trust-busting" a priority of their presidential administrations.

He is an article talking about if Apple has become a monopoly.
He is an article about Microsoft being accused of being monopoly- http://www.thisnation.com/question/027.html
He is an article about the Yankee stadium being a monopoly- http://www.realclearmarkets.com/articles/2009/04/yankee_stadium_and_the_power_o.html
He is an article about Oligopoly- http://www.enotes.com/biz-encyclopedia/oligopoly