Concentration Ratios

• Concentration ratio

  A measure of the collective market share of the largest firms in an industry
• How to calculate a concentration ratio

  1. Identify the n largest firms

  2. Add up their individual market shares

  3. Write as n:collective market share
• 1. firm concentration ratio (UK energy industry)

  • Collective market share: 92%
• Concentration ratios measure the collective market share of the largest firms, not individual firm dominance