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What are the disadvantages of high concentration ratio in industry ?

What are the disadvantages of high concentration ratio in industry ?

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Concentration ratios are used to show the extent of market control of the largest firms in the industry, and the degree to which an industry is oligopolistic.
jon.ellis
29 April 2011
A high concentration ratio would imply that a small number of businesses control a large part of a particular industry.
jon.ellis
29 April 2011
If a small number of businesses control a market, they could in theory directly influence the price customers pay. If their primary objective is to make superior shareholder returns they are likely to collaborate to charge the higher price and get higher profits.
jon.ellis
29 April 2011
I would read up on oligoplies, and think about how competition (or possibly the lack of it) effects industries like banking (for example) .
jon.ellis
29 April 2011
high concentration ration have both advantage and disadvantage. the advantage of this might seen in context of objective of firm, where firm might plan to expel out the other firms by setting lower price and control the market i.e. he or she lead the concentration ratio high. in this case the advantages goes to the consumers with low price and high supply of product avail in the market. in contrast the firm might charge high price after he or she controlled the market to get high profit which is either advantage for the firm and cost for consumers. to conclude this high productivity might afford consumer and low productivity afford producers.
kusse kamaylo
03 January 2022
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