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Froeb and McCann's Chapter 15:
a) Individual problems: 15-4 and 15-5.
Discussion Question 2: (a) What are the advantages of the
Herfindahl index over concentration ratios in measuring the
degree of concentration in an industry? (b) What is the
disadvantage of both?
DQ3: What is the difference between limit pricing and
contestable markets?
Discussion Question 8: In what way does OPEC resemble a
cartel? How successful was it?
Problem 1: Find the Herfindahl index for an industry
composed of (a) three firms—one with 70 present of the
market, and the other two with 20 and 10 percent of the
market, respectively; (b) one firm with a 50 percent share of
the market and 10 other equal-sized firms; (c) 10 equal-sized
fi rms.
Problem 5: Starting with the reaction functions of duopolists
A and B from Problem 4, find the Cournot solution
algebraically.
Froeb and McCann's Chapter 10:
a) Individual problems: 10-4.