Mathematical ratios used to quantify concentration of market shares in industries
For the chemistry and biology concept, see Dilution ratio.
In economics, concentration ratios are used to quantify market concentration and are based on companies' market shares in a given industry.
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. For example, if 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.[citation needed]
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