EVALUATION MANUFACTURING INDUSTRY
Through the use of concentration ratios economists evaluate manufactures within their industries to determine if they are within an oligopoly market system. These oligopolies may be identified by using these concentration ratios, which measure the proportion of total market share controlled by a given number of firms. When there is a high concentration ratio in an industry, economists tend to identify the industry as an oligopoly.
But first to determine this we most know what an oligopoly market system is. Oligopoly market system is a highly concentrated market system that is characterized by a small number of suppliers (but greater than one) who tend to be very large, and can keep out new competitors, along with their new ideas, new products and competitive pricing. Or a market structure in which a few firms dominate, but is possible that many small firms may also operate within an oligopoly market system. (Case, K., Fair, R. and Oster, S. 2009)
An example of concentration ratios used to evaluate manufactures industries to determine if it was a oligopoly market system would be the census conducted by the U.S. Census Bureau in 2007 of the manufacturing industry for Women and girls cut and sew dress. Manufactures like Laura W. Coleman, Shazdeh fashions, Carmela Sutera Inc. that all produce patterns to be able to cut out dress and sew it together. Within this industry there is only a few firm and all of their products and prices are basically the same, with only a 69% of total value of shipment. This factors show that this manufacturing industry operates within oligopoly market system that is concentrated with just a few firms that to a certain extent are able to control their market system.
ADVANTAGES of an OLIGOPOLY
A firm that operates within an oligopoly market system can have some advantages over the firms that operate within another market system. One of the main advantages is having only...