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Economics

Quizzes & Activities

Competition Policy (Quizlet Activity)

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Here is a quizlet revision activity covering aspects of competition policy

Here are some key competition policy terms to learn:

  • Abnormal profit: Profit in excess of normal profit - also known as supernormal profit or monopoly profit
  • Anti-competitive behaviour: Strategies to limit the degree of competition inside a market and reinforce the monopoly power of established businesses
  • Collusion: When rival companies cooperate for their mutual benefit. Common in an oligopoly / duopoly
  • Competition & Markets Authority: Body that tackles price fixing, monopolies and unfair mergers
  • Deregulation: Opening up of markets by reducing barriers to entry. The aim is to increase supply and bring lower prices for consumers
  • Herfindahl Index: A measure of market concentration. The index is calculated by squaring the % market share of each firm in the market and summing these numbers
  • Hit and run competition: When a business enters an industry to take advantage of temporarily high (supernormal) market profits.
  • Horizontal collusion: Where there is agreement between firms at the same stage of the production process to charge prices above the competitive level
  • Price capping: A legally-imposed limit on the price charged for a product
  • Privatisation: The sale of state-owned companies to the private sector, normally through a stock market listing. The opposite of nationalization
  • Regulatory capture: When industries under the control of a regulatory body appear to operate in favour of the vested interest of monopoly producers rather than consumers
  • Tacit collusion: When firms co-operate but not formally, e.g. price leadership, secret, unspoken cooperation
  • X-inefficiency: A lack of real competition may give a monopolist less of an incentive to invest in new ideas or consider consumer welfare
  • Zero sum game: An economic transaction in which whatever is gained by one party must be lost by the other.

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