Suppose the market for gasoline retailing (gas stations) in an island economy has 12 firms. The two largest firms each account for 30 percent of sales, the third accounts for 15 percent, the fourth for 7 percent, the fifth for 4 percent and the remaining firms for 2 percent each. What is the four- firm concentration ratio?

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is the percentage of the market's total sales accounted for by the top 4 firms. In this case, the top 4 firms are the two largest firms (30% + 30%) and the third and fourth largest firms (15% + 7%), which together account for 82% of sales (30% + 30% + 15% + 7%). Therefore, the four-firm concentration ratio is 82%.

Suppose the Market for Gasoline Retailing (Gas Stations) in an Island