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A concentration ratio (CR) is the sum of the percentage market shares of (a pre-specified number of) the largest firms in an industry. An n-firm concentration ratio is a common measure of market structure and shows the combined market share of the n largest firms in the market.
The Gini coefficient measures the difference between firms' sizes without including the number of firms operating in a market. This is known as a relative concentration measure and differs from absolute concentration measures (like the Rosenbluth index) which includes the number of firms and firms' distribution sizes.
In order to calculate the N-firm concentration ratio, one usually uses sales revenue to calculate market share, however, concentration ratios based on other measures such as production capacity may also be used. For a monopoly, the 4-firm concentration ratio is 100 per cent whilst for perfect competition, the ratio is zero. [37]
N-firm concentration ratio, N-firm concentration ratio is a common measure of market structure. This gives the combined market share of the N largest firms in the market. [ 9 ] For example, if the 5-firm concentration ratio in the United States smart phone industry is about .8, which indicates that the combined market share of the five largest ...
The major benefit of the Herfindahl index in relation to measures such as the concentration ratio is that the HHI gives more weight to larger firms. Other advantages of the HHI include its simple calculation method and the small amount of often easily obtainable data required for the calculation. [7]
As a quantitative description of oligopoly, the four-firm concentration ratio is often utilised and is the most preferable ratio for analyzing market concentration. [63] This measure expresses, as a percentage, the market share of the four largest firms in any particular industry.
For a single loan, the concentration ratio is simply the proportion of the portfolio the loan represents (e.g. a $100 loan in a $1000 portfolio would have a ratio of 0.1 or 10%) For a whole portfolio, a herfindahl index is used to calculate the degree of concentration to a single name, sector of the economy or country. Separate concentration ...
Firms can take measures to reduce buyer power, such as implementing a loyalty program. Buyers' power is high if buyers have many alternatives. It is low if they have few choices. Potential factors: Buyer concentration to firm concentration ratio; Degree of dependency upon existing channels of distribution