Table 1 A glossary of key terms and definitions related to market power
Allocative efficiency | The allocation of society’s limited resources to their most valuable use |
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Barriers to entry (market) | Market-based structural factors that impede or prevent a new firm from entering a market |
Brand/product differentiation | The ability of a firm to differentiate its brands/products from those of its rivals |
Common shareholder ownership | The situation that arises when investors, usually institutional investors, own shares in a number of firms active in the same market |
Distributive efficiency | The distribution of costs (including externalised costs) and benefits generated from market transactions in the fairest and most just manner |
Dynamic efficiency | The ongoing development of both process innovations (e.g. improvements in organisational, production or delivery methods that reduce cost or increase quality) and product innovations (i.e. new product and packaging development) that provide benefits to both the firm and society at large |
Gross profit margin | The difference between the total sales revenue and the total cost of production |
Industry | A group of establishments that are engaged in the same or similar kinds of production activity |
Intangible assets | An asset, such as a brand or trademark, that does not have a physical or financial embodiment |
Market | A market is the product and geographic space in which rivalry and competition take place |
Market capitalisation | The discounting of a corporation’s expected, risk-adjusted future profit and interest payments to their present value |
Market failure | The situation defined by an inefficient allocation and distribution of resources, wealth and costs in a market system. |
Market strategy | A concerted pattern of actions taken in the market environment for the purpose of improving corporate performance (i.e. maximising profits and shareholder returns) |
Monopoly | A market structure in which only one firm sells a particular commodity |
Monopsony | A market structure in which there is only one firm that buys goods and services offered by many suppliers |
Non-market strategy | A set of actions designed to improve or protect overall corporate performance by influencing the interconnected policy, regulatory, institutional, ideological and broader socio-political structures that shape market environments |
Oligopoly | A market structure in which only a few firms sell a particular commodity |
Oligopsony | A market structure in which there are only a few firms that buys goods and services offered by many suppliers |
Productive efficiency | The production of products or services at the lowest possible cost |
Share repurchase | The practice of a firm buying back its own shares |
Transfer pricing | The manipulation of pricing and payments for intermediate outputs, brand names and patent use between subsidiaries in order to maximise profits in low-tax jurisdictions |
Vertical integration | The extent to which a firm owns or controls its suppliers, distributors or buyers |