I just have a random question so what is the relationship between concentration, Economies of scale...

I just have a random question so what is the relationship between concentration, Economies of scale

If an industry has high concentration then

would EOS be high or low, so would DisEOS would be high or low?

Solutions

Expert Solution

The concentration ratio indicates whether an industry is comprised of a few large firms or many small firms. Generally speaking concentration ratio in economics is a ratio that indicates the size of firms in relation to their industry as a whole.

Low concentration ratio in an industry would indicate greater competition among the firms in that industry, compared to one with a ratio nearing 100%, which would be evident in an industry characterized by a true monopoly.

So from the above definition we can say thay if the concentration ratio in an industry is higher, it means that there are few large firms in the industry and since there are large firms they will surely have Economics of Scale.

So according to me there is a positive relationship between concentration and economies of scale.

So we can say that, If an industry has high concentration then it will have higher Economies of Scale(EOS).

Rahul Sunny answered 1 year ago

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