The formula to calculate the oligo coefficient is:
\[ O = \frac{S}{T} \]
Where:
The oligo coefficient is a measure used in economics to determine the concentration and competitiveness of a market. It is calculated by dividing the sum of market shares of the top firms (usually the top 4) by the total market share. A higher oligo coefficient indicates a more concentrated market, suggesting less competition and potentially higher market power for the leading firms. Conversely, a lower oligo coefficient indicates a more competitive market with less concentration among the top firms. This metric is useful for analyzing market structures and assessing the degree of competition within an industry.
Example 1:
Using the formula:
\[ O = \frac{60}{100} = 0.60 \]
Example 2:
Using the formula:
\[ O = \frac{80}{100} = 0.80 \]
