A Paper on Concentration Ratios
ECO 204 Principles of Microeconomics
Economics uses concentration ratios to determine whether firms in a given industry are oligopolies. This research aims at determining oligopoly using the concentration ratio in the following four industries in the United States which are fluid milk; women’s and girls cut and sew dresses, envelopes and electronic computers. Using statistics from the US census bureau, economic census (2007), I will able to answer the following questions;
1. Find the four-firm concentration ratios for the following industries: fluid milk (311511), women's and girl’s cut & sew dresses (315233), envelopes (322232), and electronic computers (334111).
2. Assess the level of competition for each of the four industries.
3. Define oligopolies and identify which of the listed industries qualify as oligopolies.
4. Describe why these industries qualify as oligopolies and identify some of the firms that operate in the listed industries.
5. Discuss whether or not oligopolies are always bad for society, using examples from the firms you described.
According to the US census bureau, economic census (2007), the four firm concentration ratio of: Fluid milk (311511) has a concentration ratio of 51.6%, Women's and girl's cut & sew dresses(315233) has a concentration ratio of 25.4%, Envelopes (322232), has a concentration ratio of 55%, and Electronic computers (334111), has a concentration ratio of 89.5%.
According to the US census bureau, economic census (2007), Women’s and girl's cut & sew dresses (315233), which has a concentration ratio of 25.4% has high competition because the 4 largest companies control only a small portion or less than a quarter of the market. Hence they don’t have that much big influence over the market the market as a whole.
Also according to the same data Fluid milk (311511), Envelopes (322232) and Electronic computers (334111), which has...