The four-firm concentration ratio, which consists of the racket share (expressed as a percentage) of the four largest firms in an industry, is a commonly used concentration ratio. The Heralding index, another indicator of firm size, has a fair amount of correlation to the concentration ratio. The four-firm concentration ratio Is an Indicator of the size (as measured by output or sales) of the four largest firms within an industry, compared to the output of the entire industry. It 1 OFF where CNN is the output of the nth largest firm and T is the total output of the industry.
The Herbicidal-Hiroshima Index (HI) is a market concentration index determined as follows: where S is the proportion of market share for the tit firm & to n The Heralding Index (H) ranges from IN to one, where N is the number of firms in the market. Equivalently, if percents are used as whole numbers, as in 75 instead of 0. 75, the index can range up to 1002, or 10,000.
A HI index below 0. 01 (or 100) indicates a highly competitive index. A HI index below 0. 15 (or 1,500) indicates an UN- concentrated index. A HI index between 0. 15 to 0. 25 (or 1,500 to 2,500) indicates moderate concentration.
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