The combined market share of the top four firms in a monopolistically competitive industry will typically be in the range of
A)Zero to 2 percent.
B)Zero to 5 percent.
C)20 to 40 percent.
D)70 to 100 percent.

Question

Quizplus · Accepted Answer

In a monopolistically competitive industry, firms differentiate their products from each other, which reduces the degree of competition but still allows for multiple firms to coexist. Therefore, the market share of each firm will be smaller than in a pure monopoly or oligopoly. The top four firms may have a combined market share of 20 to 40 percent, providing enough room for smaller firms to also capture a share of the market.

The Combined Market Share of the Top Four Firms in a Monopolistically