Computing the concentration ratio

Reference no: EM1375737

Details: Industry structure is often examine through computing the 4-company Concentration Ratio. Assume you have an industry with 20 firms and the CR is 30 percent. How would you describe this industry? Suppose the demand for the product rises and pushes up the price for the good. What long-run adjustments would you expect following this change in demand? What does your adjustment process imply about the CR for the industry? Now consider that the industry has 20 firms but the CR for the industry is 80% instead of 30%. How would you describe this industry? What are some reasons why this industry has a high CR while the other industry had a low CR? Is it possible for smaller firms to thrive and profit in such an industry? How?

There are two separate parts to this IP: a market with CR =30 and a market with CR =80. This project concerns the measurement and analysis of competition. . Each part requires you to describe the "industry"; interpret "industry" to be "market structure" For each part, select one of the four market (industry) structures and justify your choice. Note that there is insufficient information in this IP to calculate HHI HHI cannot be calculated.

Reference no: EM1375737

Questions Cloud

How the policy affects the utility''s profits and costs : Public utilities such as electricity are referred to as natural monopolies and are often subject to regulation by a state authority

Determining nash equilibrium : Think that the following data for a simultaneous move game. If you advertise and your rival advertises, you each earn $5 million in profits.

Identify common goods, public goods and private goods : Recognize similarities and differences among common goods, public goods, private goods, and natural monopolies.

Question about natural monopoly : A function of government is to regulate natural monopolies. Describe what is a natural monopoly and why it needs government regulation

Computing the concentration ratio : Industry structure is often examine through computing the 4-company Concentration Ratio. Assume you have an industry with 20 firms and the CR is 30 percent.

Monopoly behavior and government intervention : Discuss are a good thing since they transfer resources from lower rated to higher rated activities thereby helping to maximize society's happiness?

Advantages and limitations of supply and demand : Examine how an organizations in each market structure like perfect competition, monopoly and monopolistic competition maximize profits.

Concept for regulating depository financial institutions : The free market is the best regulator of business." Explain why United States public has not accepted this idea for regulating depository financial institutions.

Describe the nature of the market failure : A company is manufacturing output in a competitive market, where demand is P = 24 - 2Q. Describe the nature of the market failure and derive Pareto optimal level of output.

User Account

All Pages