Course Content
Price System, Microeconomy: Consumer Theory
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Price System, Microeconomy: Efficiency and market failure, Private costs and benefits, externalities and social costs and benefits
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Price System, Microeconomy: Types of cost, revenue and profit, short-run and long-run production
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Price System, Microeconomy: Different market structures
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perfect competition and imperfect competition; number of buyers and sellers, product differentiation, degree of freedom of entry and availability of information
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perfect competition
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imperfect competition: monopoly, natural monopoly
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imperfect competition: monopolistic competition
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imperfect competition: oligopoly
00:00
contestable markets
00:00
price competition and non-price competition
00:00
definition and calculation of the concentration ratio
00:00
Price System, Microeconomy: Growth and survival of firms; Differing objectives and policies of firms
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Government microeconomic intervention
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Labour market forces and government intervention
0/3
Macroeconomy: circular flow of income
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Macroeconomy: Economic growth and sustainability, Employment, Money and banking
0/3
Government macroeconomic intervention
0/3
International economic issues
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CAIE Alevel Economics (A2)
Content

The concentration ratio is a measure of the degree of market power held by a small number of firms in a market.

  • It measures the percentage of market share held by a given number of the largest firms in the market.
  • For example, suppose there are 10 firms in a market and the four largest firms have market shares of 30%, 25%, 20%, and 15%, respectively. The concentration ratio for the four-firm concentration would be 90% (30% + 25% + 20% + 15%).
    • This indicates that the market is highly concentrated, with a small number of firms holding a large share of the market.

The calculation of concentration ratio depends on the number of firms that are being considered. The most commonly used concentration ratios are:

  • Four-firm concentration ratio: The sum of the market shares of the four largest firms in the market.
  • Eight-firm concentration ratio: The sum of the market shares of the eight largest firms in the market.

The concentration ratio is used by economists and antitrust authorities to determine the degree of competition in a market. Higher concentration ratios indicate less competition and greater market power held by the largest firms.

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