Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively. We can conclude that

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The concentration ratio is the percentage of market share held by the top firms in an industry. In this case, the top four sellers have a total market share of (200+150+100+50)/600 = 0.833 or 83.3%, which is more than 80%. Therefore, we can conclude that the concentration ratio is more than 80 percent. This suggests that the industry is highly concentrated and may have barriers to entry that limit competition. However, we cannot make any conclusions about price leadership, oligopoly differentiation or the firms facing a kinked demand curve based on this information alone.

Suppose That Total Sales in an Industry in a Particular