Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 14

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly.
a. Industry A has a four-firm concentration ratio of 0.005 percent and a Herfindahl-Hirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.
b. Industry B has a four-firm concentration ratio of 0.0001 percent and Herfindahl-Hirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.
c. Industry C has a four-firm concentration ratio of 100 percent and Herfindahl- Hirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.
d. Industry D has a four-firm concentration ratio of 100 percent and Herfindahl- Hirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76.