Chapter13:Monopolistic Competition and Oligopoly (+ Appendix)

Worked Problems

Problem 13.1 - measures of sector concentration

Problem:

Suppose that the 6 that company in an industry have total yearly sales of $70 billion, $40 billion, $30 billion, $30 billion, $20 billion, and $10 billion.

You are watching: The four-firm concentration ratio for an industry measures the

What is the four-firm concentration ratio in this industry?What is the Herfindahl index for this industry?Suppose another industry has a Herfindahl table of contents of 4000. What have the right to you conclude around the relative competitiveness of these 2 industries?

Answer:

The four-firm concentration ratio is the proportion of the sales the the four largest this firm in the sector relative to full industry sales, expressed together a percentage. In this industry, total sales space $200 billion and the height four combined have sales that $170 billion. The four-firm concentration ratio is climate 170/200 = .85, or 85%.The Herfindahl table of contents is computed as the sum of the squared sector shares for all firms in the industry. In this example, the 6 firms have actually market share of 35%, 20%, 15%, 15%, $10%, and 5%. The index is 352 + 202 + 152 + 152 + 102 + 52 = 2200.Larger table of contents numbers exchange mail to more highly concentrated industries. Accordingly, this firm in the second industry are most likely to have an ext market power.
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Choose a ChapterChapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13Chapter 13WChapter 14Chapter 15Chapter 16Chapter 17Chapter 18Chapter 19Chapter 20Chapter 21Chapter 22Chapter 23Chapter 24Chapter 25Chapter 26Chapter 27Chapter 28Chapter 29Chapter 30Chapter 31Chapter 32Chapter 33Chapter 34Chapter 35Chapter 36Chapter 37Chapter 38Chapter 39Chapter 39WCOI 1
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Textbook Resources

Chapter Activities

Choose a ChapterChapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13Chapter 13WChapter 14Chapter 15Chapter 16Chapter 17Chapter 18Chapter 19Chapter 20Chapter 21Chapter 22Chapter 23Chapter 24Chapter 25Chapter 26Chapter 27Chapter 28Chapter 29Chapter 30Chapter 31Chapter 32Chapter 33Chapter 34Chapter 35Chapter 36Chapter 37Chapter 38Chapter 39Chapter 39WCOI 1

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