N-Firm Concentration

• What does n-firm concentration ratio measure?


  Measures the combined market share of the largest n firms in an industry.
• How is the n-firm concentration ratio calculated?


  It is calculated by summing the market shares of these firms.
• Why are n-firm concentration ratios significant?


  • Higher concentration ratios indicate a more concentrated industry with fewer dominant firms.
  • Lower concentration ratios suggest a more competitive industry with a greater number of smaller firms.
  • It can provide insights into the degree of market power held by the largest firms and potential antitrust concerns.