Purchase Solution

Highly Concentrated Industries and Oligopolies

Not what you're looking for?

Ask Custom Question

This is the answer I received for posting 30071 below. I need to answer a second part to this respond.
An industry with 20 firms but the CR = 80% is called "high concentration", for a concentration ratio of 80 to 100 percent is viewed as high concentration. Government regulators are usually most concerned with industries falling into this category. It is a good indication of oligopoly and that these four firms have significant market control.

Answers Needed to these:

*What are some reasons why this industry has a high CR while the other industry has a low CR?

*IS it possible for smaller firm to thrive and profit in such an industry? How?

*Contrast the effects efficiency if the dominating firms use a price leadership model versus a contestable markets model.

Purchase this Solution
Solution Preview

For a concentration ratio of 80 to 100 percent is viewed as high concentration. Government regulators are usually most concerned with industries falling into this category. It is a good indication of oligopoly and that these four firms have significant market control.

*What are some reasons why this industry has a high CR while the other industry has a low CR?

In industrialized countries, high CR industries are found in many sectors of the economy, such as cars, consumer goods, and steel production.
For example, the aircraft industry has a CR close to 80%. There are now only a small number of manufacturers of civil passenger aircraft. This is due to economy return to scale: the initial investment of an aircraft manufacturer or an air company is extremely high, usually involving billions of dollars. Then it is practically impossible for small firms to enter this market, although there is obviously high profit in the industry. This initial investment works like a capital barrier to entrants, and caused high CR.
Another important reason arises in a heavily regulated market ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Consumers and Nash equilibrium

    Examples of such industries are film, television, wireless, health insurance, and pharmaceuticals. Firms in these industries generally obtain high profits, characteristic oligopolies.

  • Identifying Market Structure of a Firm



    Basic principles of oligopolies

    All industries tend toward oligopoly.
    Being #1 is great, being #2 is good, being #3 is difficult, being #4 or higher is a losing game..

  • Perfect price discrimination

    3- Why do oligopolies exist? List 3 or 4 oligopolists whose products you regularly purchase. What distinguishes oligopoly from monopolistic competition? Why might price collusion occur in oligopolistic industries?

  • free market, competition, oligopolies

    Think about the markets where major oligopolies exist, for instance soft drinks/fast foods and automobile manufacturing, is there really a free market place or do the oligopolies/major corporations of America dominate?

  • Fragmented Industries and Consolidated Industries

    are competing with identical products, 3) highly specialized market( products and services are highly specialized).

  • Competition and Monopoly

    Even if one thinks coffee, some beans are different than others and the minute they enter the production process, they become differentiated. Competition and Monopoly issues are assessed. How many real industries that are oligopolies are determined.

  • How can concentrated clusters enhance the management of supply chains and improve overall firm performance?

    However, if companies are located in regions where labor is highly distributed toward some industries and not others, firms may have a more difficult time finding suitable talent.

  • The HHI

    The spectrum of market concentration as measured by the HHI can be broadly characterized as unconcentrated (HHI below 1000), moderately concentrated (HHI between 1000 and 1800), and highly concentrated (HHI above 1800).

  • What are the impacts of innovation and technology on the cost of production?

    This is because each firm is in fierce competition with its rivals, and is highly motivated to find some advantage over them.

  • Principles of Microeconomics: Pure competition

    In differentiated oligopolies companies attempt to differentiate their products from those of their competitors. (13) Monopolistic competitors and oligopolies advertise to convince consumers that their product is better than others.

View More Related Solutions