Question

How might a high concentration ratio (>60%) affect a firm’s product prices?

Answer 1

Concentration ration in simple terms is the sum of market shares of all firms in an industry

If it is greater than 60% then it is a highly oligopolistic market.

In the oligopolistic market, there are sometimes price wars due to product differentiation, service or promotion

This leads to a difference in prices and loss for all firms.

So for avoiding this, they go for forming cartels to have a common price in the market and decide the price of the product to earn profit and market control by everyone

The best example is Oil producing and exporting countries(OPEC)