The U.S. Securities and Exchange Commission has designated just nine credit-rating agencies as nationally recognized statistical rating organizations, which include Moody's, Standard & Poor's, and Fitch Ratings. These agencies provide opinions on the creditworthiness of other entities and the financial obligations issued by them. Because so few companies can compete in it, the credit-rating industry would be considered
A)a mega monopoly.
B)an oligopoly.
C)a pure competition.
D)a monopolistic competition.
E)a monopoly.

Question

Quizplus · Accepted Answer

The credit-rating industry is dominated by a small number of major players, making it an oligopoly. This is because barriers to entry are high due to the expertise, reputation, and regulatory requirements necessary to be recognized as a nationally recognized statistical rating organization. While there are still some smaller players in the market, the majority of market share is held by a few large firms.

The US Securities and Exchange Commission Has Designated Just Nine Credit-Rating