Explain What It Means That Third Variables Are "External" to the Causal

question 49

Essay

Explain what it means that third variables are "external" to the causal variable and mediators are "internal" to the causal variable.

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Definitions:

Four-firm Concentration Ratio

A measure that expresses the total market share held by the four largest firms within an industry.

Herfindahl Index

A calculation of how concentrated a market is, achieved by adding together the market share squares of every firm within that industry.

Market Power

The ability of a company or group of companies to manipulate prices or market conditions in their favor, often due to a lack of significant competition.

Oligopoly

A market structure dominated by a small number of large firms, leading to limited competition and potentially higher prices.