Industry Structure and the Four-Firm Concentration Ratio Free Essay, Term Paper and Book Report
Industry structure is more often measured by computing the Four-Firm Concentration Ratio of a particular industry as a whole. This in turn, may also assist in determining the market form of the industry. The four-firm concentration ratio is a way of measuring the concentration of the market share held by particular suppliers in a market. "It is the percentage of total market sales accounted for by a given number of leading firms." Thus a four-firm concentration ratio is the total market share of the four firms with the largest market shares. (Sometimes this particular statistic is called the CR4.) (Econterms)
The four major types of market structures:
1. Perfect competition, this is a market with a very low concentration ratio. In this market many firms sell a standardized or identical product to many buyers. Without any single firm having the power to affect market price, so each firm accepts the market price as is. Also, in a perfectly competitive market there are no restrictions or barriers to market entry; therefore, firms can easily enter or exit the market. (pg 261).
2. Mo......
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