What's it: Government intervention refers to the government's deliberate actions to influence resource allocation and market mechanisms. It can take many forms, from regulations, taxes, subsidies, to monetary and fiscal policy. In some cases, the
Microeconomics
Price Taker: Meaning, Characteristics, and Examples
What's it: A price taker refers to a firm that cannot influence market prices and can only set an output price at the market price. All firms in perfect competition are price taker. Conversely, in imperfectly competitive markets, some firms
Strategic Entry Barrier: Concept, Types, Examples
What's it: Strategic entry barrier is actions taken by existing companies (incumbents) to deter new players from entering their market. It can take various forms, such as limit pricing, product differentiation, and loyalty schemes. Another term
Diseconomies of Scale: Types, and Causes
What's it: Diseconomies of scale are the economic disadvantages when a firm increases its production. Instead of lowering average costs, increasing output results in higher average costs. It usually occurs when the company has reached the minimum
Barriers to Entry: Types, and Impacts on Competition
What's it: Barrier to entry is an obstacle that prevents or minimizes the opportunities for a new company to enter a market. A barrier arises because it is deliberately created by existing companies (incumbents) through predatory pricing and
Herfindahl-Hirschman Index: Concept, How to Calculate, Pros and Cons
What's it: Herfindahl-Hirschman Index (HHI) is a measure of market concentration. You compute it by summing the squares of each firm's market share in the industry. This is an alternative to the n-firm concentration ratio. This index is important