An industry with five firms that each have 20% market share would be considered _____ concentrated; if two of these firms merged to control 40% of market share, the industry would now be considered _____ concentrated.

Question

Quizplus · Accepted Answer

Initially, with each firm holding an equal 20% share, the market is moderately concentrated. After the merger, with a single entity controlling 40%, concentration increases, making it highly concentrated.

An Industry with Five Firms That Each Have 20% Market