Concentration ratio is a measure used to determine the level of market dominance by a few large firms in a particular industry. It is calculated by adding up the market share of the top firms in the industry and expressing this as a percentage of the total market share.

A high concentration ratio indicates that a small number of firms control a large percentage of the market, while a low concentration ratio indicates a more competitive market with many small firms sharing the market share.

The concentration ratio is a useful tool for understanding the competitive dynamics of an industry and identifying potential antitrust issues. High concentration ratios may lead to concerns about monopolistic practices and may prompt regulatory action, while low concentration ratios may indicate a more competitive market that benefits consumers through lower prices and greater innovation.

The concentration ratio is a measure used in economics and business to determine the market share controlled by a specific number of firms within an industry. Typically expressed as a percentage, it indicates how much of the total industry output, revenue, or sales is dominated by the largest firms (e.g., top 4, 8, or 10 companies).

A high concentration ratio suggests an industry dominated by a few firms, often indicative of an oligopoly or monopoly. A low concentration ratio reflects a competitive market with many small players.

This metric helps analyze market structure, competition levels, and potential barriers to entry. Regulators and analysts often use it to assess the degree of market power and its impact on consumers and economic efficiency.