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How “economic concentration’’ in the hands of a few, harmful to the Overall business development in an economy?

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Question ajoutée par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date de publication: 2014/09/17
Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

The extent to which a market is taken up by producers within a given industry.

It is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market.

As an economic tool it is useful because it reflects the degree of competition in the market.

Bain's (1956) original concern with it was based on an intuitive relationship between high concentration and collusion.

There are game theoretic models of market interaction (e.g. among oligopolists) that predict that an increase in  concentration will result in higher prices and lower consumer welfare even when collusion in the sense of cartelization (i.e. explicit collusion) is absent. Examples are Cournot oligopoly, and Bertrand oligopoly for differentiated products.

 

Nasir Hussain
par Nasir Hussain , Sales And Marketing Manager , Pakistan Pharmaceutical Products Pvt. Ltd.

Agreed to Mr. VJ

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