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It is agreed by economists that the college textbook publishing industry is an oligopoly, with a...

It is agreed by economists that the college textbook publishing industry is an oligopoly, with a 4-firm concentration ration of 88%. Is this good or bad for students buying textbooks? Explain
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A concentration ration of 88% imply that the market for textbooks is highly oligopolistic. This means that there are huge barriers to entry, there is huge interdependence of the firms in decisions such as advertising and there is high price rigidity. This is in a sense good for students since the pricing decision of the firms is not uniform. When one firm raises price of the books other firms may not follow the suit while when a cut in the price by one firm is retaliated by other firms by a larger cut. This may initiate a war of price and thus the firma end up charging a low price which is good for students.

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