Microeconomics · free preview
The Economics of Few Sellers
Oligopoly means a few interdependent sellers whose best choice depends on what rivals do, and it lives between monopoly's pricing power and competition's discipline.
1. Between one and many
Between one and many
2. Measuring the fewness
Measuring the fewness
3. The pull in both directions
The pull in both directions
4. Previewing the map
Previewing the map
5. Interdependence
What makes oligopoly different from both perfect competition and monopoly as a decision environment for a firm?
6. Reading the Herfindahl
An industry has four firms with market shares 40, 30, 20 and 10 percent. What is its Herfindahl index, and what does a rising index generally signal?
7. A merger's index
A market has three firms with shares 30, 30 and 30 percent plus small fringe firms at 10 total. The two 30 percent firms merge into one 60 percent firm. Compute the new Herfindahl index using just these four shares (60, 30, 10), and write the number.
8. The defining feature
What makes oligopoly different from both perfect competition and monopoly as a decision environment?
9. Another concentration number
An industry has three firms with market shares of 50, 30 and 20 percent. What is its Herfindahl-Hirschman Index?
10. Concentration of the trio
A market has three firms with shares of 50, 25 and 25 percent. Compute the Herfindahl-Hirschman Index, and write the number.
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