The top four firms in industry A have market shares of 30,25,10,and 5 percent,respectively. The top four firms in industry B have mraket shares of 15,12,8,and 4 percent, respectively. Calculate the four-firm concentration ratios for the two industries. Which industry is more concentrated?

Question

The top four firms in industry A have market shares of 30,25,10,and 5 percent,respectively. The top four firms in industry B have mraket shares of 15,12,8,and 4 percent, respectively. Calculate the four-firm concentration ratios for the two industries. Which industry is more concentrated?

Answer 1

To calculate the four-firm concentration ratios for the two industries, we need to add up the market shares of the top four firms in each industry and divide the sum by 100.

For Industry A, the sum of the market shares of the top four firms is:

30 + 25 + 10 + 5 = 70

So, the four-firm concentration ratio for Industry A is 70/100 = 0.7 or 70%.

For Industry B, the sum of the market shares of the top four firms is:

15 + 12 + 8 + 4 = 39

So, the four-firm concentration ratio for Industry B is 39/100 = 0.39 or 39%.

Comparing the two ratios, we can see that the four-firm concentration ratio for Industry A (70%) is higher than that of Industry B (39%). Thus, Industry A is more concentrated than Industry B.