
138 Chapter 5
demand for its own product. us, at a given price the market share of the dominant rm equals the
market demand less the share of small rms.
For example, when market price is set at OP
3
, the total supply by the smaller rms is P
3
E which equals
the market demand. erefore, at price OP
3
, the market le for the dominant rm is zero. When price
falls to OP
2
, the demand for dominant rm’s product is CF = P
2
F − P
2
C. Following this process, the
market share of the dominant rm at other prices can be easily obtained.
Note that the gap between demand curve DD
M
and supply curve P
1
S
S
below point E in Figure 5.13(a)
measures the dema ...