Browse Definitions :
Definition

market distortion

Contributor(s): Matthew Haughn

Market distortion is the lack of free and open competition in a market, whether through intentional actions or prevailing market conditions. Further distortion occurs when governing bodies step in to regulate the market, for example by setting price floors or ceilings or offering tax subsidies.

A market may become distorted when a single business holds a monopoly or when other factors prevent free and open competition. This distortion causes problems for consumers as well as for private sector businesses following standard procurement procedures. A lack of competition typically means higher prices.

A monopoly may exist because of a lack of competition or not enough strong competitors. An effective monopoly situation can arise in a number of ways:

  • Intellectual property ownership can prevent other suppliers from filling a need.
  • Customers may specify source requirements.
  • There may be prohibitive costs for switching suppliers. 
  • A lack of technically acceptable solutions may exist among competitors.
  • Company policies may form barriers to businesses or international suppliers.

A distorted market also can result when multiple companies form cartels to intentionally control markets instead of competing with one another.

This was last updated in June 2016

Continue Reading About market distortion

SearchCompliance

SearchSecurity

  • cyber attack

    A cyber attack is any attempt to gain unauthorized access to a computer, computing system or computer network with the intent to ...

  • backdoor (computing)

    A backdoor is a means to access a computer system or encrypted data that bypasses the system's customary security mechanisms.

  • post-quantum cryptography

    Post-quantum cryptography, also called quantum encryption, is the development of cryptographic systems for classical computers ...

SearchHealthIT

SearchDisasterRecovery

  • risk mitigation

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • call tree

    A call tree is a layered hierarchical communication model that is used to notify specific individuals of an event and coordinate ...

  • Disaster Recovery as a Service (DRaaS)

    Disaster recovery as a service (DRaaS) is the replication and hosting of physical or virtual servers by a third party to provide ...

SearchStorage

  • cloud SLA (cloud service-level agreement)

    A cloud SLA (cloud service-level agreement) is an agreement between a cloud service provider and a customer that ensures a ...

  • NOR flash memory

    NOR flash memory is one of two types of non-volatile storage technologies.

  • RAM (Random Access Memory)

    RAM (Random Access Memory) is the hardware in a computing device where the operating system (OS), application programs and data ...

Close