A-State ECON 6313 - Oligopoly (32 pages)

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Oligopoly



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Oligopoly

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Pages:
32
School:
Arkansas State University
Course:
Econ 6313 - Managerial Economics
Managerial Economics Documents

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Oligopoly Outline Salient features of oligopolistic market structures Measures of seller concentration Dominant firm oligopoly Rivalry among symmetric firms The Cournot model The kinked demand curve Oligopoly is derived from the Greek work olig meaning few or a small number Oligopoly is a market structure featuring a small number of sellers that together account for a large fraction of market sales Features of oligopoly Fewness of sellers Seller interdependence Feasibility of coordinated action among ostensibly independent firms Measures of seller concentration The concentration ratio is the percentage of total market sales accounted for by an absolute number of the largest firms in the market The four firm concentration ratio CR4 measures the percent of total market sales accounted for by the top four firms in the market The eight firm concentration ratio CR4 measures the percent of total market sales accounted for by the top eight firms in the market Concentration Ratios Very Concentrated Industries Industry or Product Refrigerators Motor vehicles Soft drinks Long distance telephone Laundry machines Breakfast foods Vaccuum cleaners Running shoes Beer Aircraft engines Domestic air flights Tires Aluminum Soap Pet food CR4 CR8 94 94 94 92 91 88 80 79 77 72 68 66 64 60 52 98 98 97 97 NA 93 96 97 94 83 82 86 88 73 71 Source U S Bureau of the Census Census of Manufacturers Concentration Ratios Less Concentrated Industries Industry or Product Fast food Personal computers Office furniture Toys Bread Lawn equipment Machine tools Paint Newspapers Furniture Boat building Concrete Women s dresses CR4 CR8 44 45 45 41 34 40 30 24 22 17 14 8 6 57 63 59 58 47 57 44 36 34 25 22 12 10 Source U S Bureau of the Census Census of Manufacturers Seller interdependence If Kroger offers deep discounts on soft drinks will Wal Mart follow suit Northwest Airlines perks miles do not expire how did United Delta et al react Verizon carries unused minutes over the to next month implications for



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