Concentration measures

Statistics summarising how much of an industry its largest firms control, such as their combined market share. High concentration tends to mean less price competition, though not always.

Where you will meet it

Concentration measures appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Assess trends in how large an industry is, its growth, its profitability and the market shares within it
  CFA Level I · Equity Investments

  “Market share and its trend, often summarised by concentration measures such as the combined share of the largest firms, show whether a few firms dominate and whether leaders are gaining or losing ground, which bears directly on pricing power.”

• Set out how the concentration of an industry can be measured
  CFA Level I · Economics

  “Concentration measures summarise how much of an industry a few firms control.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
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All terms beginning with C · Glossary