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11 terms

Economics Chapter 16 (Monopolistic Competition and Oligopoly)

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market structure
the physical characteristics of the market within which firms interact
monopolistic competition
a market structure in which there are many firms selling differentiated products and few barriers to entry
oligopoly
a market structure in which there are only a few firms and firms explicitly take other firms' likely response into account
strategic decision making
taking explicit account of a rival's expected response to a decision you are making
cartel model of oligopoly
a model that assumes that oligopolies act as if they were monopolists that have assigned output quotas to individual member firms of the oligopoly so that total output is consistent with joint profit maximimization
implicit collusion
multiple firms make the same pricing decisions even though they have not explicitly consulted with one another
contestable market model
a model of oligopoly in which barriers to entry and barriers to exit, not the structure of the market, determine a firm's price and output decisions
North American Industry Classification System (NAICS)
an industry classification that categorizes industries by type of economic activity and groups firms with like production processes
concentration ratio
the value of sales by the top firms of an industry stated as a percentage of total industry sales
Herfindahl index
an index of market concentration calculated by adding the squared value of the individual market shares of all the firms in the industry
cartel
a combination of firms that acts as if it were a single firm