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concentration ratio, n-firm meaning

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  • [Economics]
    The proportion of a market taken up by the n largest firms. This is normally expressed as a percentage of the market as a whole. Size may be measured in various ways, including output, employment, and market capitalization of the various firms. The n-firm concentration ratio takes no account of the distribution of firm sizes either between the largest n firms, or within the tail of smaller firms. A three-firm concentration ratio of 90 per cent, for example, is consistent with the three largest firms having 35, 30, and 25 per cent of the market respectively, or 85, 3, and 2 per cent: these competitive structures are very different.
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