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Essay / Research Paper Abstract
This 5 page paper analyses the extent to which measures of concentration can capture the degree of competition that exists in a given market. The bibliography cites 4 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEconcop.rtf
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Unformatted sample text from the term paper:
as this creates lower process for consumers, but it will also mean that innovation and developments are encouraged with the need to compete. There are different ways of measuring
the level of competition that takes place in any market, one tool is that of measuring concentration. This is a measure that may be seen as a static measure that
looks only to the current level of competition. Indeed, the two main tools, the Herfindahl-Herschman index and CR4 ratios are seen by some as limiting. They do give indications that
are useful, but only look to the current time and do not look to the market share of the individual companies that make up the concentration.
To look at concentration it is necessary to quickly consider the different market forms. A monopoly is a market form where there is only a
single supplier, this has been more common in some energy markets and also in transportation. The monopoly industries are gradually disappearing with liberalisation and increased competition. This single company control
means that market forces will mean very little as the monopoly is often in a industry where there is elasticity of a company is below 1 and as such is
an essential service, therefore there is a large amount of power with the supplier and as such there are many problems with a monopoly. If a competitor which to enter
that market they will not be able to as their entrance will be blocked (Thompson, 1998). Concentration here is very clear. Oligopolies are
the next model, here there are either only a few operators, or the market is dominated by only a few operators, even if they are operating under subsidiary companies. If
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