When Different Market Concentration Indices Agree
AbstractMarket concentration ratios are popular statistics for characterizing the extent of market dominance in an imperfectly competitive market, but these ratios may not agree when comparing two markets. Neither do they necessarily agree with the Herfindahl-Hirschman or entropy indices. This letter compares two Cournot oligopoly markets in which firms have constant unit costs. It is shown that the majorization pre-ordering on normalized marketing margin vectors is both necessary and sufficient for all aforementioned indices to agree on which is the more concentrated market.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12550.
Date of creation: 23 Mar 2006
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Publication status: Published in Economics Letters, May 2007, vol. 95, pp. 234-240
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- NEP-ALL-2006-04-01 (All new papers)
- NEP-COM-2006-04-01 (Industrial Competition)
- NEP-MIC-2006-04-01 (Microeconomics)
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