Oligopoly: Perfect Competition and States Census Bureau Essay

Submitted By nataliehope
Words: 1124
Pages: 5

There are many different types of ways that the world of economics could run in these days. There are monopolies where there is one main controller that is setting how much is being produced, what the prices are being assigned to the items and even to some degree who is allowed to purchase it. There also the perfect competitive economies that there is no controller that the people of the economy decide what is being produced by the demand for the items and even have control over the prices of the item. There is the option of being a monopolistically competitive economy where there are a large number of small firms producing a product competing for the consumer’s attention. The other option is to be an oligopoly industry where there are a smaller number of large firms creating more control over the market for the products. The question becomes which market is realistic and it is a good way to have industries run or will actually end up hurting the economy as a whole. The concentration ratio comes into play with the economy and the industries because it is “the share of industry output in sales or employment accounted for by the top firms,” (Case, Fair, & Oster, 2009. p.285). The larger a firm output in sales is, the more that the firm can try and control the market for their products with the help of a couple other firms (theoretically speaking). There are four examples of industries on how the concentration ratios can be used to study how an industry is doing and whether or not it is an oligopoly or not. The four industries are electronic computers (33411), envelopes (322232), women’s and girl’s cut and sews dresses (315233), and fluid milk (311511). This information about these industries is released from the United States Census Bureau. In the electronic computers industry they have a total of 70 different companies that produce them. Some of these companies are Dell, Apple, IBM, and Hewlett Packard. Out of these 70 companies the total value of their shipments are $407,507, which equals a hundred percent of their total value of shipments. The top four largest companies’ total value of shipments percentage is sixty-one point nine percent. This is well over fifty percent of the industries shipment value making it an oligopoly industry. With the top eight companies the percent of the industries value of shipment rises to seventy-seven point eight percent. That makes up for a little over three fourths of the industries shipment values. (United States Census Bureau, 2012). The second industry is the envelope manufactures. There are a total of 166 different companies in this industry. Some of the different companies that make up this industry are Classic Envelope, Priority Envelope, L A Envelope Inc., and Direct Envelope. The total value of shipments in this industry is $3,362,461, which equals a hundred percent of the industries total value of shipment percentage. The top four firms in the envelope manufacturing industry makes up fifty-one percent of the total value of shipments for the total industry. That would be enough to make this industry an oligopoly industry due to the control that those four firms could do to influence the markets. (United States Census Bureau, 2012). The third industry is the women’s and girls’ cut and sew dress manufacturing industry. This industry has 525 different companies that compose it. Some of the different companies that operate in this industry are Maurices, Creative Apparel, Faded Glory, and JC Penny. A hundred percent of the total value of shipments for the industry is $3,362,461. The top four firms in the industry have twenty-one point six percent of the total value of shipment percentage. This would not classify this industry as an oligopoly industry. More likely this industry would be considered a monopolistically competitive industry. The top eight firms do not even classify it as an oligopoly industry due to only making up thirty-one point nine