Macroeconomics - Industrial Economics Essay Example | Topics and Well Written Essays - 2000 words

Macroeconomics - Industrial Economics - Essay ExampleConcentration ratios are calculated depending on the largest firms groceryplace shares. If 90 percent of industry is produced by four largest firms, then hat indicates an oligopoly and the four firms have a good market place share (Curry and George, 1983). At the low end closeness, a zero percent tightfistedness means that there is perfect competition meaning the number of firms is too large that the largest firms have no percentage of the market. On the other hand, 100 percent concentration ratio implies that there is a tough oligopoly. It therefore, means, there is monopoly. 0 to 50 percent concentration ratio can be interpreted as a low concentrated industry. In this, oligopoly is at the top while monopolistic competition locomote at the bottom. Medium concentration takes a 50 to 80 percent concentration and is considered to be genuinely much oligopolistic. High concentration operates from 80 to 100 percent concentratio n (Curry and George, 1983). ... Concentration ratios of eight firms range from 88.5 to 97.4. Concentrations are on the upper end indicating high oligopoly almost coming to a monopolistic market structure. From the data above, considering the concentration ratios, it shows that in the first two twelvemonths, there is less oligopoly. It then increases in the year 2002 where it is at highest. Then due to high turnover, there are more than firms joining the industry which causes the concentration ratios to lower reducing oligopoly. Herfindahl-Hirschman Index (HHI) is another cadency of market concentration. In calculating it, the market ruin of each company that is competing in the market is squared, then summing the results. It can range from zero to 10,000. The higher the markets concentration, the closer it is to being a monopoly and the less competitive it is (Curry and George, 1983). Considering the investigations conducted, it showed that the market concentration is highest in the year 2002 which is 1577, and it is lowest in year 2000. This indicates that the market was less competitive in the year 2002 than in 2000 which were more competitive. The competition then increases from 2003, goes down in the following year then starts to decline again. Since the markets results ranges from 1,000 to 1,800, it can be termed as a moderately concentrated market. We can therefore, conclude that it has some oligopoly. To what terminus do the major studios - those named in the CR4, CR6 and CR8 indices - outperform the market? In the economic model, competition among firms that are rivals reduces moolah to zero. But competition is imperfect and firms are not price takers. Industry concentration is used to measure rivalry. A high concentration ratio shows most of the