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Chapter 26: Q. 2 (page 597)

The table below shows recent worldwide market shares of producers of inkjet printers.

a. In this year, what was the four-firm concentration ratio in the inkjet-printer industry?

b. In this year, what was the seven-firm concentration ratio in the inkjet-printer industry?

Short Answer

Expert verified

a. The four-firm concentration ratio is 89percent.

b. the seven-firm concentration ratio is 99percent

Step by step solution

01

Given Information

The given numbers tables

The table indicates the percentage share of worldwide market sales.

02

Explanation (a)

From the table,

A Four-firm Concentration Ratio is the proportion of the consolidated market portions of the four biggest firms to the entire market size determined by adding the market portions of the four biggest firms.

The four-firm concentration ratio is calculated by taking the total percentage share of the top four firms into account.

Hence we have,41+18++17+13=89%

03

Explanation Part (b)

The table is,

Seven-firm Concentration Ratio is the proportion of the consolidated market portions of the seven biggest firms to the entire market size determined by adding the market portions of the seven biggest firms.

Hence we have,41+18+17+13+6+3+1=99%

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Most popular questions from this chapter

Take a look at Figure 26-3. What is the total dollar amount of the typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that after the fact no firms cheat on the specified cartel agreement? Explain your reasoning.

Take a look back at the data regarding the inkjet printer industry in Problem 26-2, and answer the following questions.

a. Suppose that consumer demands for inkjet printers, the prices of which are readily observable in office supply outlets and at Internet sites, are growing at a stable pace. Discuss whether circumstances are favorable to an effort by firms in this industry to form a cartel.

b. If the firms successfully establish a cartel, why will there naturally be pressures for the cartel to break down, either from within or from outside?

Consider the following list, and classify each item according to the appropriate type of two-sided market-audience-making, matchmaking, shared input, or transaction-based-and write a one sentence answer justifying your classification. (Hint: You may wish to check out the firms' Web sites to assist in answering this question.)

a. Realtor.com

b. NYTimes.com

c. Linux.com

d. Paypal.com

Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 35 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 10 percent market share. What is the four-firm concentration ratio for this industry?

In Problem 26-14, what is the value of the Herfindahl-Hirschman index?
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