You want to start a company, and are trying to decide between two different industries. You are doing your final research before you write your business plan.
Industry A has 20 firms and a Concentration Ratio (CR) of 20%
* What is the name for this type of industry?
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Describe some of this industry's characteristics.
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If you were in this industry and there was an increased demand for the product that pushed up the price of goods, what long-run adjustments would you expect?
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What does your anticipated adjustment process imply about the CR for the industry?
Industry B has 20 firms and a Concentration Ratio (CR) of 85%.
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What is the name for this type of industry?
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Describe some of this industry's characteristics.
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What are some reasons why this industry has a high CR while Industry A had a low CR?
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Is it possible for smaller firms to thrive and profit in Industry B? Why or why not?
3 answers