Question

Why do some industries, like the manufacture of aircraft engines, become highly concentrated, but the market for meals (restaurants) remains highly fragmented?

Can somebody explain this to me? Thank you so much.

Answer 1

Highly Concentrated & Fragmented Industries

Highly concentrated industries are those in which small number of firms holds most of the share of the market. Aircraft engine manufactures include in the type of industry where the entry and exit are more difficult and firms do not prefer to be engaged since the investment and infrastructural costs are very high. The market share is hold by a few numbers of firms or companies who produces and distributes aircraft engines. Higher barriers force firms to not enter in the highly concentrated industry.  

The market for meals or restaurants are highly fragmented since the less barriers to entry and exit makes the market more competitive and the share of the market is hold by many of the firms in that particular market. No single company or firm can hold the large share of the market in the fragmented industry. Firms enter into the market seeing the fewer barriers and compete with others to acquire a share of the market like all other firms hold. Each of them as the example of restaurant holds a small share of the market unlike that in highly concentrated industries.