Manufacturing Industry Evaluation - Research Paper Example

Manufacturing Industry Evaluation Economists sometimes make use of concentration ratios to determine whether industries are oligopolies. The following paper examines recent data available on oligopolies according to concentration ratios in the Manufacturing industry according to a census carried out by the U.S. Census Bureau. According to this Census, concentration ratios for the fluid milk (311511), womens and girl’s cut & sew dresses (315233), envelopes (322232), and electronic computers (334111) are 315, 525, 166 and 465 respectively.

These are further translated as 42.6 percent, 21.6 percent, 51.1 percent and 75.5 percent for the fluid milk industry, women’s and girl’s cut and sew dresses and the envelopes industries, and the electronics computers industries, respectively. According to this census, the level of competition for the fluid milk, women’s and girl’s cut and sew dresses, envelopes is highest for fluid milk and envelopes considering that Herfindahl Hirschman index for 50 largest companies is 1060, 829.9 and 185.

5, respectively. The level of competition for the electronic computers industry is extremely high, considering that the Herfindahl Hirschman index for 50 largest companies is one of the highest at 2662.0. This reveals that the level of competition is lowest in the envelopes industry, whose Herfindahl Hirschman index for 50 largest companies is the lowest at 185.5, respectively. Oligopolies can be defined as industries whereby there are a small number of sellers or competitors. According to this definition, some of the listed industries that qualify as oligopolists include the envelope industry and the fluid milk manufacturing, whereby there are only 166 and 315 companies in the industries, a small number of industries in consideration of the other industries that have large number of competitors.

The electronic computer manufacturing industry, for example, has 465 competitors or member companies. This means that the industry cannot be described as an oligopoly, rather, as an industry that is experiencing perfect competition. Some of the firms that operate in these industries are listed below. In the envelope industry, these firms include Warren De La Rue and Edwin Hill. In the fluid milk manufacturing, these companies include the Elmhurst Dairy, Inc., the Southeast Milk Inc., the Oberweis Dairy, the Dairy Dynamics, LLC, and the Rutter Bros Dairy, Inc (McEachern, 2012).

According to the definition of oligopolies above, one is bound to think that oligopolies are always bad for society. However, the listed industries that qualify as oligopolies are not always bad for the society. The reason these industries have their benefits for the society is because when an industry or the society has only a limited number of companies that control a large portion of the industry, this is bound to reduce the likelihood of one of the members making any unjustified increases in pricing.

However, when an industry is concentrated like in the case of a few people like in electronic computers, a representation of four out of 465 firms, and they are not spread out more, smaller firms are not necessarily able to get their names marketed and market their products and services. This is unless they get absorbed by a larger firm that is part of the oligopoly. The case of Electronic computers demonstrates that when the wealth is concentrated, representing 4 out of only 465 firms, it is not easy for new ideas to be developed and displayed.

Either they should be absorbed competitive, oligopoly businesses or they may not achieve their financial objectives. ReferencesMcEachern, W. A. (2012). Economics: A contemporary introduction. Mason, OH: South- Western Cengage Learning.