Federal statutes designed to regulate trade, maintain competition, and prevent monopolies.
General Motors, Ford, and Chrysler are collectively known as the Big Three automakers in the United States. Once dominating over 90% of car sales in the country, their market share has significantly declined over the past three decades, particularly in the face of competition from foreign automakers like Honda, Toyota, Hyundai, and Nissan.
Competition refers to the rivalry in the marketplace wherein goods and services are bought from those who provide 'the most for the money.' It rewards efficient producers and suppliers, driving the economy toward the efficient use of resources.
A competitor is a manufacturer or seller of a product or service that is sold in the same market as that of another manufacturer or seller. Competitors offer products or services that satisfy similar consumer needs within the same market.
A concentration ratio measures the proportion of total industry sales controlled by the largest firms within the industry, typically the top four or eight firms.
Defensive spending refers to strategic expenditures by a company aimed at maintaining its market position and countering competitive threats. It is closely related to the concept of competitive parity.
Eating a competitor's lunch refers to aggressively outperforming and gaining market share from competing firms through strategies like aggressive pricing, superior product offerings, or enhanced customer service.
The Federal Trade Commission (FTC) is a federal agency founded in 1915 under the Federal Trade Commission Act of 1914, designed to protect free enterprise and promote fair competition.
A horizontal combination occurs when two or more companies operating at the same level in an industry merge to form a larger entity. It is similar to a horizontal merger.
Horizontal conflict refers to discord between competitors operating at the same level within a marketing channel, often resulting in market oversaturation and severe competition. It contrasts with vertical conflict, involving different levels within the distribution hierarchy.
Interindustry competition refers to the competition that develops between companies operating in different industries. For example, an automobile company may compete with an aerospace company for a government manufacturing contract for a military subsystem.
Marginal Cost Pricing sets product prices based solely on the product's marginal costs. It is typically employed in exceptional situations where competition is intense.
A monopolist is a firm or individual entrepreneur that is the sole producer of a good and represents the entire market supply of that good. This exclusive control allows the monopolist to influence the price and quantity of the product in the market.
Patent warfare refers to the practice of utilizing multiple patents with varied expiration dates covering different aspects of the same invention, intending to block competition post the original patent's expiration.
A Perfect (Pure) Monopoly is a market structure dominated by a single producer, where no competition of any kind to that producer can arise, allowing them to exert significant control over prices and output.
Predatory pricing involves deliberately lowering prices of merchandise or services to drive competitors out of the market, with the intent to raise prices once the competition is eliminated.
Price discrimination is the practice of charging different customers different prices for the same products or services. When this practice is used to reduce competition, it may violate antitrust laws.
Price-fixing is an illegal activity under federal antitrust laws in the United States. It occurs when competing businesses agree, collude, or conspire to set or maintain the price of a commodity or service, rather than allowing market forces to determine price. The purpose and effect of price-fixing are to manipulate prices in a way that eliminates competition and harms consumers by maintaining higher prices or controlling the supply of goods or services in interstate commerce.
A comprehensive guide detailing the transition of a publicly owned company or asset to private sector ownership, including economic and political motivations, examples, FAQs, related terms, and learning resources.
Substitutes are products or services that can be used in place of each other, fulfilling similar needs or functions. Substitutes play a crucial role in determining market dynamics and consumer choices.
A vertical merger is a business combination in which members of a vertical channel of distribution merge, eliminating the middleman, potentially lowering costs, and possibly making a company more competitive if the savings are passed on to the consumer.
