Question
Hello, below I am I need of help with this discussion below, please help me answer all of the following a, b, c, d,...! a)
Hello, below I am I need of help with this discussion below, please help me answer all of the following a, b, c, d,...!
a) Consider the characteristics of an oligopoly industry. Identify an industry that you think might fit into the Oligopoly category. Be sure to make clear the scale you are analyzing (i.e., Global, National, or local). An industry may not be accurately described as an oligopoly globally or nationally but it may fit the characteristics of an oligopoly here locally in Dutchess County or in the Hudson Valley. Be creative. Do not use simple ones like smartphones, cell phone service providers, Internet Search Engines, Oil industry, Toothpaste, Beer, Tires, you cannot pick any of these industries.
b) Identify the main companies in this industry, in the scale you have chosen, as best as you are aware with a few minutes of thinking and web browsing (here is one discussion where web browsing needed ;-). Find estimates for the market share of each company (or guestimate it yourself if you can't find much). MAKE SURE YOU ESTIMATES/GUESTIMATES OF MARKET SHARE ADD UP TO 100%. Use these estimates/guestimates to calculate the Herfindahl-Hirschman Index (HHI) based upon those market shares. The intent is to have you be able to calculate an HHI and answer the question: Based upon the course materials, does the HHI value you calculated suggest this is an Oligopoly industry (explain why or why not)?
c) Define Tacit Collusion. Do you see any behaviors (from a few internet searches) suggesting tacit collusion (like price match guarantees (or other tit for tat behavior), price leadership: one company usually changing price first and other's matching etc)). The answer may be no, but consider it and provide your conclusions.
d) Do you see any characteristics of the industry that may limit the success of the companies tacitly colluding (refer to the types of conditions from the the ones listed below).
OLIGOPOLY IN PRACTICE: TACIT COLLUSION
Many do succeed in achieving tacit collusion (unspoken agreements).
However, tacit collusion is limited by a number of factors, including:
- less concentration.
Too many companies to hope all "behave"
- Differentiated products.
If each firm's products are different (or they can convince consumers they
are different) consumers develop preferences.
- complex products and pricing scheme.
Companiesmighteachsellmanydifferentproducts(hardtomonitoreach
other)
May avoid competing directly on price, engaging in nonprice
competition through advertising or other means
- differences in interests
don'tagreeonhowtosplittheindustry(50/50,60/40etc).
OnefirmhaslowerMarginalcostthantheother(hardtoagreeonprofitmaxlevel
of output) - bargaining power of buyers.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started