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ZERO GROWTH: A growth rate (usually in terms of population) that is equal to zero. In other words, this is no change from one year to the next. This goal has been proposed by those who content that population growth is placing excessive pressure on the planet's availability of limited resources and its ability to assimilate pollution. In general terms, zero growth can apply to any measurement, including production, prices, etc.

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Lesson 20: Oligopoly | Unit 2: Structure Page: 8 of 24

Topic: Herfindahl Index <=PAGE BACK | PAGE NEXT=>

  • Sometimes economists prefer a more sophisticated measure of concentration. That measure is the Herfindahl index.

  • The Herfindahl index is a measure of concentration of production or sales activity in an industry that's calculated as the sum of the squares of market shares for each firm.
  • One key difference with concentration ratios is that the Herfindahl index squares market shares before adding them together, whereas concentration ratios add the adjusted market shares.

  • Like concentration ratios, the Herfindahl index ranges for a low, indicating perfect competition, to a high indicating monopoly.

  • The specific range is 0 (perfect competition) to 10,000 (monopoly).


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PERFECT COMPETITION, REALISM

Perfect competition is an idealized market structure that does NOT exist in the real world. While some real world industries might come relatively close to one or two of the four key characteristics of perfect competition, none matches all four sufficiently that they can be declared PERFECTLY competitively. Some industries come close on the large number of small firms and the identical product characteristics. A few industries have relatively good, although not perfect, information about prices and technology. However, almost all industries fall far short of the perfect mobility characteristics.

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APLS

ORANGE REBELOON
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Today, you are likely to spend a great deal of time at a crowded estate auction seeking to buy either a package of blank rewritable CDs or yellow cotton balls. Be on the lookout for slightly overweight pizza delivery guys.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
"Intense concentration hour after hour can bring out resources in people they didn't know they had. "

-- Edwin Land, inventor, entrepreneur

BPEA
Brookings Papers on Economic Activity
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