Industry is a collection of firms offering goods or services that are close substitutes of each other. An Industry consists of firms that directly compete with each other. Industry structure refers to the number and size distribution of firms in an industry. The number of firms in an industry may run into hundreds or thousands. The size distribution of the
Firm is important from both business policy and public policy views. The level of competition in an industry rises with the number of firms in the industry.
i) Fragmented Industry
If all firms in an industry are small in size when compared with the size of the whole industry, then it is known as fragmented industry. In a fragmented industry, no
Firms have large market. Each firm serves only a small piece of total market in competition with others.
ii) Consolidated Industry
If small number of firms controls a large share of the industry’s output or sales, it is known as a consolidated industry.
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