This leaves us with the problem of measuring industrial concentration. One simple measure of industry concentration that has been used is the Four Firm Concentration Ratio (FFCR). The FFCR is simply the market share of the four largest firms in an industry.
Suppose an industry has six firms and the market shares of the four largest are 40%, 25%, 15%, and 10%. For this industry the FFCR would be .4 + .25 + .15 + .1 = .9. The maximum value of the FFCR is 1, which would mean there are four or fewer total firms in the industry in question, clearly a concentrated industry.
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