Seller concentration

But the large industrial houses managed to influence its lending policies of those institutions. In it some of the producers dealing in the same commodity come nearer and closer to each and combine in one form or the other so as to avoid competition.

There are game theoretic models of market interaction e.

importance of sellers concentration

Although concentration ratios are easy to calculate and easily understood, there are two shortcomings. Causes of Concentration of Economic Power in India: In a rapidly rising and growing economy like India some degree of inequality and concentration of economic power and wealth in a few hands is to be expected, but the disturbing things is that the degree of inequality and concentration is very much more that can be justified on a ground.

Seller concentration the previous firm example, the HHI would be Big industries derived utmost advantage from this. In its nature blesses the nation with bounties in a particular commodity and that is available in that country, which can control that in the way that likes.

An alternative concentration measure that avoids these problems is the HHI The sum of the squared individual market shares of all the firms in a market; a value of less than indicates that a market should be reasonably competitive, whereas a value over indicates that the market has a firm that may function like a monopoly.

On the contrary concentration of economic power means centralisation of effective control over important economic activities Industry, Agriculture, Transport etc. Grants are also provided. Any criterion that can be used to compare or rank distributions e.

Again, a high concentration measure indicates a potential for exploitation of seller power but not proof it will actually happen. In the case of banking services, even with the mergers that have resulted in higher seller concentration, if you look at measures of bank concentration at the national level, there seems be a loose oligopoly.

Market concentration

Any criterion that can be used to compare or rank distributions e. The financial institutions were set up with the ideal of helping the private sector. Related posts:. Since the regression equation controls for the seller concentration effect, it is possible that the negative sign reflects the desire of firms to sacrifice per unit profit in order to achieve volume efficiency Martin, This measure is practically useful only if a sample of firms' market shares is believed to be random , rather than determined by the firms' inherent characteristics. There is no external force or compulsions to join or to combine, that is why it is called voluntary monopoly. Among 20, Chidambaram Group had the most spectacular growth rate. Extent of the Concentration of Economic Power in India: In a developing economy such concentration of economic power widens the gap of disparity in income and wealth, which is harmful to the development of the country.

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Seller concentration