Question

There are more than 168,000 interstate motor carriers with more than 2 million trucks in the U.S., according to the American Trucking Associations, an industry group. Does the large number of carriers necessarily indicate that the industry is perfectly competitive

Answer 1

Answer :

It is given that a large number of carriers are there according to the  American Trucking Associations. But it is not necessary that the industry is competitive because there are several factors that make industry competitive.

The industry would be competitive if there is free exit and entry of the carriers from the industry

Or if they are providing homogeneous products and services. Another factor would be that all the carriers would have perfect and complete information about the quality of market and other factors in market.

Also the carriers would have very little share in the market and would not be able to influence the prices that prevail in the market . IN the above case all these factors are not mentioned , so it is difficult to say that the given industry is competitive. Maybe some motor carriers would have a large number of share as compared to another and would be able to influence market prices.

Hence it is not necessary that the industry is perfectly competitive.

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