Answered: what is the Four-firm concentration…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 1SCQ: Is it true that a merger between two films that are not already in the top four by size can affect...

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what is the Four-firm concentration ratio (CR4)?

what is the Herfindahl-Hirshman Index (HHI)?

and how are they different?

Expert Solution

Step 1

The four-firm concentration ratio measures the percentage of total sales done by the top four firms in the industry. In other words, the four-firm concentration ratio represents the market share of the largest four firms in the industry.

If the four-firm concentration ratio is greater than 60% then, in this case, that market is said to be an oligopoly market and if the four-firm concentration ratio is less than 40% then in this case that market is said to be a monopolistic market.

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