Concentration Ratios Essay Example

ranges from 50-80%, which encompasses perfect competition to oligopoly. In my view, competition within this industry is high.

Finally, the four-firm concentration ratio for electronic computer manufacturing is 75.5%, which also falls in the medium level of concentration. The closer the four-firm concentration percentage is to 80%, the closer this firm is to an oligopoly, and the least amount of competition there is within the industry. Oligopoly is an industry characterized by a few dominant firms and products produced may be homogenous or differentiated (Case, Fare, and Oster 2009). In this type of industry, there are high barriers for entry and limited price competition.

According to the United States Census Bureau in 2002, electronic computer manufacturing is the industry that most closely resembles an oligopoly. There are currently 465 companies operating within this industry, with a four-firm concentration ratio of 75.5%. The major players in this sector include Hewlett-Packard, Acer, Dell, Apple, and Lenovo. Among these multinational computer manufacturers, Hewlett-Packard, Apple, and Dell are based in the United States while Acer is based in Taiwan and Lenovo is based in China.

By capitalizing on economies of scale, oligopolies can benefit societies. This is evident in the mass production of computers by HP, Acer, Apple, Dell, and Lenovo which leads to decreased production costs and prices. As a result, these companies are able to offer their products at reduced prices to consumers. If computer production was carried out by numerous small firms instead of a limited number of large firms, the cost of the product would be higher.

Oligopolies in society have a positive impact, fostering technological advancement and leading to economic growth and improved quality of life. This

is evident in the computer manufacturing industry, where companies like HP, Acer, Dell, Apple, and Lenovo can effectively boost their production capacities by leveraging abundant resources. Within this sector, competition serves as a driving force for innovation among these firms.