Concentration Ratios
Norma G. Adams
ECO 204
Sheila Roberts-Phipps
January 28, 2013

A quick look into the Concentration Ratios for four different industries, and how Making the decision whether they are oligopolies and how that effects that industry. If an industry is oligopolies is that good or bad for society. The diversity of the industries that are in this study should give a nice idea of how competitive some industries can be. First a look into the fluid milk industry, the U.S. Census Bureau shows that there are 280 different companies in the manufacturing of fluid milk. The largest four companies make up 46 percent of the industry themselves. The industry sells $33,547,992,000.00 per year, which is a very large industry. This industry appears to be an oligopoly, because the four largest companies make up almost 50 percent with the largest eight being 58 percent of the industry (census). “An oligopoly is an industry dominated by a few firms that, by virtue of their individual sizes, are large enough to influence the market price.” (case 2009) The census information shows that the largest eight firms should be able to control the industry and the prices that everyone else should follow. Next a look into the envelope manufacturing industry, here the census bureau shows that the largest four firms make up 57.6 percent of the industry that only consist of 149 firms, selling a total of $3,653,185,000.00 per year (census). With the largest four firms making up over half of the total sales this industry would be considered an oligopoly industry. Next a look into the electric computers industry, here the census bureau shows that the largest four companies make up 86.9 percent of the total industry. This would diffidently be considered an oligopoly industry. With the four companies making up that much of the industry they defiantly would control cost for the entire industry. Lastly a look into women’s and girl’s cut and sew dresses. This information was recovered from SIC information showing that the four largest firms only make up eleven percent, and the eight largest seventeen percent (census). Also under this category was another section listed with a D. This D may represent designer firms, here it shows the largest four firms at eighteen percent and the largest eight at thirty percent of the industry. Some of the firms that would be considered under these categories would be Dell, Hewitt/Packard, Dairy Farmers of America, Dean Foods, Land o’Lakes, Tension Envelope Corp. These firms are some of the largest and very well known companies in the United States and maybe in the world. The companies that qualify as oligopoly do have a lot to do with the cost that is paid by society, and is not always a bad thing. It can keep the smaller companies from getting carried away with charging to much for their products. So after looking into these four industries and whether they qualify as an oligopoly or not we see that most of them would be, and how them being so has effected the market. The prices society pays for their products is normally kept within a reasonable range. With the addition of new products the electric computer industry will fluxiate in price, but once the others catch up things get back to an expectable range.

Reference:

U.S. Census Bureau- (http://www.census.gov/epcd/www/concentration.html)

Case, K.E., Fair, R.C., Oster, S.E. (2009) Principles of microeconomics (9th edition)