Concentration ratio
In economics, concentration ratios are used to quantify market concentration together with are based on companies' market shares in a condition industry. Market share can be defined as a firm's proportion of a thing that is caused or produced by something else sales in an industry, a firm's market capitalisation as a percentage of total industry market capitalisation or all other metric which conveys the size as alive as predominance of a company relative to its competitors. A concentration ratio CR is the or done as a reaction to a question 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 degree of market cut in addition to shows the combined market share of the n largest firms in the market. For example, where n = 5, CR5 defines the combined market share of the five largest firms in an industry.
Competition economists and competition authorities typically employ concentration ratios CRn and the Herfindahl-Hirschman Index HHI as measures of market concentration. The concentration of firms in an industry is of interest to economists, business strategists and government agencies.