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price leadership model

1. When the CR = 80%, is the market efficient when the market behavior follows the price leadership model?

2. When the CR=80%, is the market efficient when the market behavior follows the contestable markets model?

Price leadership -setting a price w/the expectation that the other firms match the leader's price

contestable markets -a market in which the costs of entering + leaving are low, so the firms that already in the market are constantly threatened by the entry of new firms.

concentration ratio - is a way of measuring the concentration of the market share held by particular suppliers in a market.

Solution Summary

An efficient market is exemplified.

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