The formula to calculate the Market Concentration Ratio (CR) is:
\[ CR = \frac{S}{M} \]
Where:
A market concentration ratio is a measure used to assess the degree of competition within a market. It is calculated by summing the market shares of the top N firms in the market and dividing this sum by the total market size. A higher concentration ratio indicates that a few firms dominate the market, while a lower ratio suggests a more competitive market with many players. Market concentration ratios are commonly used in economics and business to analyze market structure and competition levels.
Consider an example where:
Using the formula to calculate the Market Concentration Ratio:
\[ CR = \frac{60}{100} = 0.60 \]
This means that the market concentration ratio for this example is 0.60, indicating that the top N firms hold 60% of the total market.
