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Market Power in Real Industries

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About This MicroSim

This MicroSim plots real industries on a two-dimensional map where the x-axis represents the level of competition and the y-axis represents product differentiation. Industries like commodity wheat appear in the high-competition zone, while local utilities and desktop operating systems cluster in the monopoly zone. Clicking on any industry bubble reveals details including its four-firm concentration ratio (CR4), number of players, barriers to entry, and an explanation of why it falls where it does. This makes abstract market structure concepts concrete by connecting them to brands and industries students already know.

How to Use

  1. Examine the bubble chart. Each colored bubble represents a real industry, positioned by its level of competition (left = less, right = more) and product differentiation (bottom = less, top = more).
  2. Click on any bubble to open a detail panel showing the industry's CR4 concentration ratio, number of players, barriers to entry, examples, and an explanation of its market position.
  3. Use the Filter dropdown at the bottom to show only industries in a specific market structure category (Perfect Competition, Monopolistic Competition, Oligopoly, or Monopoly/Near-Monopoly).
  4. Compare industries across zones. Notice how industries with high barriers and few players cluster on the left, while those with low barriers and many players cluster on the right.

Iframe Embed Code

You can add this MicroSim to any web page by adding this to your HTML:

<iframe src="https://dmccreary.github.io/economics-course/sims/market-power-map/main.html"
        height="562px"
        width="100%"
        scrolling="no"></iframe>

Lesson Plan

Grade Level

9-12 (High School Economics)

Duration

10-15 minutes

Prerequisites

  • Understanding of the four market structures
  • Knowledge of what concentration ratios measure
  • Familiarity with barriers to entry

Activities

  1. Exploration (5 min): Have students click on at least one industry in each of the four colored zones and record its CR4 ratio, number of players, and barriers. Ask them to identify the pattern between these characteristics and the industry's position on the map.
  2. Guided Practice (5 min): Use the filter to show only Oligopoly industries. Discuss why these industries (airlines, cell carriers, search engines, social media) all share high barriers to entry despite having different products. Ask students whether any of these could become more competitive and what would need to change.
  3. Assessment (5 min): Students pick an industry not shown on the map (e.g., video game consoles, grocery stores, electric vehicles) and write where they would place it on the chart, justifying their x and y coordinates with evidence about competition level and product differentiation.

Assessment

  • Students can interpret the two axes and explain what an industry's position on the map tells us about its market structure.
  • Students can use CR4 ratios and barrier levels to classify industries into the correct market structure category.
  • Students can predict how changes in barriers or competition would shift an industry's position on the map.

References

  1. Concentration ratio - Wikipedia -- Explanation of CR4 and other concentration measures used to assess market power.
  2. Market structure - Wikipedia -- How economists classify markets by number of firms, product differentiation, and barriers.
  3. Product differentiation - Wikipedia -- How firms distinguish their products and the effect on market competition.