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Concentration Ratio
The percentage of total output of an industry manufactured by a certain number of firms. Thus, if the four
Implications
A measure of the total market share held by the top firms in an industry, often used to assess the level of competition and market power within the industry.
Example
Example: The concentration ratio in the smartphone industry shows that the top four companies control over 80% of the market, indicating high market concentration.
Related Terms
Different from market share analysis, which looks at individual companies, concentration ratio focuses on the collective dominance of top players in an industry.
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