Concentration Ratio
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High Quality Content by WIKIPEDIA articles! The standard tools of competition economists and competition authorities to measure market concentration are the Herfindahl index (HHI) and concentration ratios (CR(n)). These two are known as the traditional structural measures of market concentration (based on market shares). The concentration of firms in an industry is of interest to economists, business strategists and government agencies. Concentration ratios are measures of the total output that is produced in an industry by a given number of firms in the industry. The most common concentration...
High Quality Content by WIKIPEDIA articles! The standard tools of competition economists and competition authorities to measure market concentration are the Herfindahl index (HHI) and concentration ratios (CR(n)). These two are known as the traditional structural measures of market concentration (based on market shares). The concentration of firms in an industry is of interest to economists, business strategists and government agencies. Concentration ratios are measures of the total output that is produced in an industry by a given number of firms in the industry. The most common concentration ratios are the CR4 and the CR8, which means the 4 and the 8 largest firms. Concentration ratios are usually used to show the extent of market control of the largest firms in the industry and to illustrate the degree to which an industry is oligopolistic.
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