Concentration ratios have often been used to note the tightness of an oligopoly market. A high concentration ratio indicates a tight oligopoly market, and a low concentration ratio indicates a loose oligopoly market. Would you expect firms in tight markets to reap higher profits, on average, than firms in loose markets? Would it matter if the markets were contestable? Explain your answers.
Concentration ratios have often been used to note the tightness of an oligopoly market. A high concentration ratio indicates a tight oligopoly market, and a low concentration ratio indicates a loose oligopoly market. Would you expect firms in tight markets to reap higher profits, on average, than firms in loose markets? Would it matter if the markets were contestable? Explain your answers.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter24: Monopolistic Competition, Oligopoly, And Game Theory
Section: Chapter Questions
Problem 9QP
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- Concentration ratios have often been used to note the tightness of an oligopoly market. A high concentration ratio indicates a tight oligopoly market, and a low concentration ratio indicates a loose oligopoly market. Would you expect firms in tight markets to reap higher profits, on average, than firms in loose markets? Would it matter if the markets were contestable? Explain your answers.
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