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Problem 36

Use Table 11.5 and Table 11.6 to calculate the He…

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Problem 35

Use Table 11.5 to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?

Answer

There are certain ratios and indexes which are used by economists to measure the
competitiveness of an industry like four-firm ratio, HHI, etc. Antitrust laws are the laws and
regulations that are imposed by government or authorities to ensure the increased
competitiveness in the market.
The four-firm concentration ratio helps know the market dominance of top firms in the industry by
adding up the market share of top four market share holding firms in the industry.
Calculate the four-firm concentration ratio as follows:
$=19+17+14+11$
$=61 \%$
Thus, the four-firm concentration ratio is 61$\%$
As, the four-firm concentration value shows that these four firm covers more than 60$\%$ market so
it is a concentrated market.


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Video Transcript

Okay, let's calculate the four firm concentration ratio for the U. S. Auto market. Here we have the top for firms you know we have to do is add up the American shares. So the student nine per 7 16 was for his 20. This one is 21 21 234 56 61 Brooks. So the four firm concentration ratio for the U. S. Auto market is 61. It's a concentrated right there. Or not. Um, yes, this is higher than you would like, right? For firms Thing of own 61% of the market. So I would say this relatively high. It's not too high. Well, just definitely. It might raise some eyebrows if two of these firms were too propose a merger.

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