Question

3.

Canon : Digital Camera
Market Share	18.7% (Top market share)
Own price elasticity of Demand	-4.0
Industry elasticity of Demand	-1.6
Average Retail price	$240
Marginal Cost	$180
Five firm concentration ratio: Canon, Sony, Kodak, Olympus, and Samsung	60.9%

Here is data on the Digital camera company Canon.

Discuss the following items:

1. Industry concentration

2. Demand and Market conditions

3. Canon Pricing behavior: Competitive, Monopolistic, or Monopolistically Competitive?

Answer 1

Industry concentration is the degree of total production of the industry which n number of firms make of that industry. If industry concentration is high, this means that n number of firms are influencing the industry. In the given case, top five firms of the industry hold 60% of the market. This means that the industry concentration is high in this industry.

Demand of canon company in the market is high. Rather it holds the highest market share in this camera company industry. The market of camera company is a competitive one with a number of firms in the market having elastic price elasticity of demand.

Canon camera company is monopolistically competitive. This industry has a huge number of buyers and sellers producing products which are not identical but quite similar to each other.

The pricing of Canon is done keeping in mind the competition of the market. Not too much profit is kept by Canon in its pricing. The difference between the price and cost is not too much. This is beit has to compete in the market.