Concentration 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 (CR_n) and the Herfindahl-Hirschman Index (HHI) as measures of market concentration.^{[citation needed]}