Browse Definitions :
Definition

concentration ratio (CR)

A concentration ratio (CR) is a metric used in economics to express the distribution of companies in a particular industry relative to the size of the market. The terms industry concentration ratio and market concentration ratio are sometimes used.

The most common application of the concentration ratio is exploring how much of the market is controlled by the top companies -- to find, for example, the four-firm concentration ratio (CR4) or the eight-firm concentration ratio (CR8).

The CR is expressed as a percentage. A CRn that is very low, where n represents any number of companies, expresses a market environment sometimes referred to as perfect competition, in which supply and demand balance naturally.

An environment in which five or fewer companies control 60 percent or more of a market (CR5=60%) is considered an oligopoly. A ratio of 100 percent (CR1=100%) indicates a total monopoly, in which a single company controls the entire market. A duopoly is defined as a situation in which two companies control a majority of the market (CR2=>50%).

Markets with low concentrations are considered competitive. Highly concentrated markets, which may result from market distortion, are considered anti-competitive and are generally not beneficial to consumers.

This was last updated in April 2019

Continue Reading About concentration ratio (CR)

SearchCompliance

SearchSecurity

  • cyber attack

    A cyber attack is any attempt to gain unauthorized access to a computer, computing system or computer network with the intent to ...

  • backdoor (computing)

    A backdoor is a means to access a computer system or encrypted data that bypasses the system's customary security mechanisms.

  • post-quantum cryptography

    Post-quantum cryptography, also called quantum encryption, is the development of cryptographic systems for classical computers ...

SearchHealthIT

SearchDisasterRecovery

  • risk mitigation

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • call tree

    A call tree is a layered hierarchical communication model that is used to notify specific individuals of an event and coordinate ...

  • Disaster Recovery as a Service (DRaaS)

    Disaster recovery as a service (DRaaS) is the replication and hosting of physical or virtual servers by a third party to provide ...

SearchStorage

Close