Economics Monopolistic Competition Questions
Market concentration in monopolistic competition refers to the degree to which a market is dominated by a few large firms. It measures the extent to which a small number of firms control a significant portion of the market share. In monopolistic competition, each firm produces slightly differentiated products, giving them some degree of market power. However, unlike in a monopoly or oligopoly, there are many firms operating in the market. Market concentration can be measured using various indicators such as the concentration ratio or the Herfindahl-Hirschman Index (HHI). A higher market concentration indicates that a few firms have a greater influence on market outcomes, potentially leading to reduced competition and higher prices for consumers.