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

  • information governance

    Information governance is a holistic approach to managing corporate information by implementing processes, roles, controls and ...

  • enterprise document management (EDM)

    Enterprise document management (EDM) is a strategy for overseeing an organization's paper and electronic documents so they can be...

  • risk assessment

    Risk assessment is the identification of hazards that could negatively impact an organization's ability to conduct business.

SearchSecurity

  • PKI (public key infrastructure)

    PKI (public key infrastructure) is the underlying framework that enables entities -- users and servers -- to securely exchange ...

  • obfuscation

    Obfuscation means to make something difficult to understand.

  • dumpster diving

    Dumpster diving is looking for treasure in someone else's trash.

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

  • cloud storage

    Cloud storage is a service model in which data is transmitted and stored on remote storage systems, where it is maintained, ...

  • cloud testing

    Cloud testing is the process of using the cloud computing resources of a third-party service provider to test software ...

  • storage virtualization

    Storage virtualization is the pooling of physical storage from multiple storage devices into what appears to be a single storage ...

Close