You want to start a company, and are trying to decide between two different industries. You are doing your final research before you write your business plan. Industry A has 20 firms and a Concentration Ratio (CR) of 30%
What is the name for this type of industry? Describe some of this industry s characteristics. If you were in this industry and there was an increased demand for the product that pushed up the price of goods, what long run adjustments would you expect?
What does your anticipated adjustment process imply about the CR for the industry? Industry B has 20 firms and a Concentration Ratio (CR) of 80%. What is the name for this type of industry? Describe some of this industry s characteristics. What are some reasons why this industry has a high CR while Industry A had a low CR? Is it possible for smaller firms to thrive and profit in Industry B? Why or why not?
