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Chapter 26: Q.14 (page 599)

Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 35 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 10 percent market share. What is the four-firm concentration ratio for this industry?

Short Answer

Expert verified

the four-firm concentration ratio for this industry is $65 %$

Step by step solution

01

Given Information

Four-firm Concentration Ratio is the proportion of the consolidated market portions of the four biggest firms to the entire market size determined by adding the market portions of the four biggest firms.

02

Explanation

The bigger company has the largest share of $35 %$

The other three firms each have a $10 %$ market share.

Hence the four-firm concentration ratio for this industry is $35 + 10 + 10 + 10 = 65 %$

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