Ch.6+Market+Structures

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.
 * Terms: **
 * 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.

Topics: ** 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: -Geographic Monopolies -Technological Monopolies -Government Monopolies**
 * -Natural Monopolies

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

__-__**__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.
 * Antitrust Policy in Recent Decades:

Connection to everyday life: ** Monopolies in everyday life>>> 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.
 * Public utilities (gas, water, cable TV)
 * Local telephone service companies
 * Professional Sports Teams

[] He is an article talking about if Apple has become a monopoly. [] He is an article about Microsoft being accused of being monopoly- [] He is an article about the Yankee stadium being a monopoly- [] He is an article about Oligopoly- [] [] [] [] [] [] [] [] [] []