Concentration Coefficient Calculator

Formula

The formula to calculate the Concentration Coefficient (CC) is:

\[ CC = MS_1^2 + MS_2^2 + MS_3^2 + MS_4^2 + MS_5^2 \]

Where:

CC – The concentration coefficient.
MS1 – The market share of firm 1.
MS2 – The market share of firm 2.
MS3 – The market share of firm 3.
MS4 – The market share of firm 4.
MS5 – The market share of firm 5.

Definition

Concentration Coefficient (CC): A measure used in economics to determine the extent of market concentration.
Market Share (MS): The portion of a market controlled by a particular company or product.

Example

Let's say the market shares of five firms are as follows: MS1 = 20%, MS2 = 15%, MS3 = 25%, MS4 = 10%, and MS5 = 30%. Using the formula:

\[ CC = 20^2 + 15^2 + 25^2 + 10^2 + 30^2 = 400 + 225 + 625 + 100 + 900 = 2250 \]

So, the concentration coefficient is 2250.

What is a Concentration Coefficient?

The concentration coefficient is a measure used in economics to determine the extent of market concentration. It quantifies the degree to which a small number of firms control a large portion of the market. A higher concentration coefficient indicates a higher level of market concentration, which can imply less competition and potential monopolistic or oligopolistic market conditions. This metric is particularly useful for assessing the competitive landscape of an industry and for regulatory purposes.