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how to calculate n-firm concentration ratios
add together firms with the largest market share, eg. 3-firm = add together 3 firms, 5 firm = add together five firms
significance of concentration ratios
- measures extent of market power held by the largest firms in an industry
- helps analyse the degree of monopoly/oligopoly (market structure analysis)
- govts can use concentration ratios to monitor industries for anti-competitive behaviour and enact policy accordingly