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Monopoly
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Theory of market structure based on three assumptions: there is one seller, it sells a product that has no close substitutes, and the barriers to entry are extremely high
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public franchise
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Firm's government-granted right that permits the firm to provide a particular good or service and that excludes all others from doing so.
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natural monopoly
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Condition in which economies of scale are so pronounced that only one firm can survive.
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price searcher
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a seller that has the ability to control to some degree the price of the product it sells
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deadweight loss of monopoly
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The net value of the difference between the competitive quantity (P=MC) of output and the monopoly quantity (P>MC) of output. The loss due to not producing the competitive quantity of output.
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Rent seeking
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Actions of individuals and groups that spend resources to influence public policy in the hope of redistributing income to themselves from others.
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X-inefficiency
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Increase in costs, due to organizational slack in a monopoly, resulting from the absence of competitive pressure to push costs down to their lowest possible level.
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price discrimination
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A price structure in which the seller charges different prices for the product it sells ad the price differences do not reflect cost differences.
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perfect price discrimination
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occurs when a firm charges the maximum amount that buyers are willing to pay for each unit
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second-degree price discrimination
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Occurs when seller charges uniform price per unit for one specific quantity, a lower price for an additional quantity, and so on.
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third-degree price discrimination
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charging different prices to different demographic market segments
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Arbitrage
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the process of buying a good at low prices and selling it at high prices
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