Question

1. You can use my link provided, or you are free to choose another credible link for another industry. On the site https://netmarketshare.com/search-engine-market-share.aspx?options=%7B%22filter%22%3A%7B%22%24and%22%3A%5B%7B%22deviceType%22%3A%7B%22%24in%22%3A%5B%22Desktop%2Flaptop%22%5D%7D%7D%5D%7D%2C%22dateLabel%22%3A%22Trend%22%2C%22attributes%22%3A%22share%22%2C%22group%22%3A%22searchEngine%22%2C%22sort%22%3A%7B%22share%22%3A-1%7D%2C%22id%22%3A%22searchEnginesDesktop%22%2C%22dateInterval%22%3A%22Monthly%22%2C%22dateStart%22%3A%222017-02%22%2C%22dateEnd%22%3A%222018-01%22%2C%22segments%22%3A%22-1000%22%7D we see market share data for Search engines. If you use another source of market share data please include the citation in the form of a url.

a. Would you describe this market as competitive, monopolistic, or oligopolistic. Fully explain why.

b. Calculate the 4 firm concentration ratio and the HHI. For the HHI assume the entire industry is made up of the top 8 firms.

c. Does Baidu effectively compete with Google, Bing, and Yahoo! ? Fully explain why or why not. If you conclude that they are not competitors how do your calculations in part b change? Fully explain

Answer 1

a. This market is oligopolistic. In case if the market would have been competition, each firm would have had similar products, but as we know that all three search engines are not identical. Next had the market be monopolistic, the total number of the service providers, in that case,e would be one, which is not the case. So the present market represents the oligopolistic characteristics of a market structure. The product is similar but differentiated, also the number of service providers is not very high.

b. 4 firm concentration ratio is (74.52+10.49+7.98+5.41) which is 98.4%.

Supposing the total number of firms are 8. So each firm's share will be 74.52/99.79 or .746, 10.49/99.79 or .105, 7.98/99.79 or 0.079, 5.41/99.79 or 0.054, .79/99.79 or 0.0079, .27/99.79 or .0027, .21/99.79 or .0021, .12/99.79 or .0012

The HHI is the summation of squares of market shares of the firms. So here, it is .746²+.105²+.079²+.054²+.0079²+.0027²+.0021²+.0012² or 0.576.

c. The market one is oligo[olistic. Two, these firms are competing but are at the same time interdependent on each other. Yes, Baidu can be seen as effectively competing with other engines, had it not been true, being a late in the market it wouldn't have gained more share than Yahoo and others.