Consider two industries in industry 1 there are 2 firms


Consider two industries. In industry 1, there are 2 firms each holding 50% of market share. In industry 2, there are 5 firms, one firm holds 85% of market share, another firm holds 10%, two firms hold 2% each and the last firm holds 1%. Which industry exhibits higher concentration (as measured by the Herfindahl index)? What does the Structure-Conduct-Performance paradigm predict about the comparison of market power in the two industries? Can you think of some economic reasoning behind this prediction?

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Business Economics: Consider two industries in industry 1 there are 2 firms
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