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

Join the conversation

2 comments

Send me notifications when other members comment.

Please create a username to comment.

What is a cartel?
Cancel
A cartel is a group that's organized around a specific purpose; the term often refers to a small group of businesses that form some kind of organization to regulate prices.
Cancel

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

  • smart contract

    A smart contract, also known as a cryptocontract, is a computer program that directly controls the transfer of digital currencies...

SearchSecurity

  • RSA algorithm (Rivest-Shamir-Adleman)

    The RSA algorithm is the basis of a cryptosystem -- a suite of cryptographic algorithms that are used for specific security ...

  • remote access

    Remote access is the ability to access a computer or a network remotely through a network connection.

  • IP Spoofing

    IP spoofing is the crafting of Internet Protocol (IP) packets with a source IP address that has been modified to impersonate ...

SearchHealthIT

SearchDisasterRecovery

  • virtual disaster recovery

    Virtual disaster recovery is a type of DR that typically involves replication and allows a user to fail over to virtualized ...

  • tabletop exercise (TTX)

    A tabletop exercise (TTX) is a disaster preparedness activity that takes participants through the process of dealing with a ...

  • risk mitigation

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

SearchStorage

  • enterprise storage

    Enterprise storage is a centralized repository for business information that provides common data management, protection and data...

  • disk array

    A disk array, also called a storage array, is a data storage system used for block-based storage, file-based storage or object ...

  • optical storage

    Optical storage is any storage type in which data is written and read with a laser. Typically, data is written to optical media, ...

Close