1) Proper market definition is important for performing sound economic analysis
ID: 1120065 • Letter: 1
Question
1)Proper market definition is important for performing sound economic analysis and is particularly important in enforcing anti-trust rules. Recently, there is rising concern over the amount of merger activity among hospitals.[1] Using the American Factfinder, find the table from the 2012 Economic Census that provides Concentration Ratios for Hospitals (The two-digit NAICS sector in which hospitals are placed is “Health Care and Social Assistance”. Hospitals have a three-digit code under the Health Care and Social Assistance sector). Report the Concentration Ratios for 4 largest firms, the 8 largest, 20 largest and 50 largest hospitals.
Explanation / Answer
The concentration ratio is the portion of total revenue generated by the largest firms in the industry. A concentration ratio of 60% and avove is consider as oligopoly.
According to 2012 census, the market share of 4 largest hospitals in USA is 8.4%, 8 largest firms is 12.3%, 20 largest firm is 20.3% and 50 largest firms is 31%.
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