Question

In the small town of geneva, there are 5 firms that make watches. the firms’ respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. the four-firm concentration ratio for the town’s watch-making industry is:

Answer 1

The four-firm concentration ratio is a term used to refer to the market share of the four largest firms. In this given example, the total number of output every year is 100 watches per year. Then, 90 of which are coming from the four largest firm. Thus, the four-firm concentration ratio is equal to 90%.