concentration ratio

Fig. 29 Concentration ratio. Market A is here highly concentrated, with the four largest firms accounting for 80% of market sales, while market B has a relatively low level of concentration.

concentration ratio

a measure of the degree of SELLER CONCENTRATION in a MARKET. The concentration ratio shows the percentage of market sales accounted for by, for example, the largest four firms or largest eight firms. The concentration ratio is derived from the market concentration curve, which can be plotted on a graph, with the horizontal scale showing the number of firms cumulated from the largest size and the vertical scale showing the cumulative percentage of market sales accounted for by particular numbers of firms. See CONCENTRATION MEASURES, MARKET STRUCTURE.