Computing the four firm concentration ratio

Reference no: EM1376298

Industry structure is often measured by computing the Four Firm Concentration Ratio. Assume you have an industry with 20 companies and the CR IS 30 percent. How would you explain this industry?Suppose the demand for the product rises and pushes the price for the good.What long-run adjustments you expect following this change in demand.
Now consider the industry has 20 Firms but the CR for the industry is 80% instead of 30%.How would 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?contrast the effects on market efficiency if the dominating firm use a price leadership model versus a contestable markets models.

Reference no: EM1376298

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