Measuring Market Power
Concentration ratios are the most common measures of market power. The four-firm concentration ratio measures the percentage of total industry output attributable to the top four companies. For monopolies the four firm ratio is 100 per cent while the ratio is zero for perfect competition. Another measure of concentration is the Herfindahl-Hirschman Index (HHI) which is calculated by "summing the squares of the percentage market shares of all participants in the market." The HHI index for perfect competition is zero; for monopoly, 10,000. The four firm concentration domestic (U.S) ratios for cigarettes is 93%; for automobiles, 84% and for beer, 85%.
Read more about this topic: Market Power
Famous quotes containing the words measuring, market and/or power:
“By measuring individual human worth, the novelist reveals the full enormity of the State’s crime when it sets out to crush that individuality.”
—Ian McEwan (b. 1938)
“the old palaces, the wallets of the tourists,
the Common Market or the smart cafés,
the boulevards in the graceful evening,
the cliff-hangers, the scientists,
and the little shops raising their prices
mean nothing to me.”
—Anne Sexton (1928–1974)
“There is something else which has the power to awaken us to the truth. It is the works of writers of genius.... They give us, in the guise of fiction, something equivalent to the actual density of the real, that density which life offers us every day but which we are unable to grasp because we are amusing ourselves with lies.”
—Simone Weil (1909–1943)