four-firm concentration ratio

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The combined market share of the four largest firms in a particular industry expressed as a percentage. For example, the combined market share of the four largest UK supermarkets has been calculated at nearly 80%. The four-firm ratio is often held to indicate the form or structure of a market in respect of competition (i.e. whether it takes the form of monopolistic competition, oligopoly, or monopoly). A concentration ratio of over 40%, for example, is usually held to indicate an oligopoly. See also herfindahl index.

Subjects: Business and Management.

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