Calculate the four-firm concentration ratio (CR4), plus CR3, CR8 and HHI, from the market shares or sales of the largest firms in a market.

List at least the four largest firms. Choose All firms only when the list covers the whole market.

One number per line, or separate with semicolons or a comma and space (25, 20, 15, 10).

Optional settings

Related Calculators

Concentration Ratio Formula

The following formula is used to calculate a concentration ratio of an industry.

4CR = MS1 + MS2 + MS3 + MS4
  • Where 4CR is the concentration ratio of the top four firms in an industry
  • MS is the market share % of each of the top four firms

What is a concentration ratio?

In finance, a concentration ratio is a measure of the total market share that is owned by the top four firms in the sector or industry.

It is used to understand and analyze the total competition in an industry. It’s not the only metric that should be used but it is one of them.

For example, a 90% four-firm share indicates greater concentration than a 10% share. Concentration alone does not establish the amount of competition or market power.

Concentration ratios can use different numbers of firms; CR4 and CR8 use the largest four and eight. HHI sums the squared percentage shares of every firm.

How to calculate 4-firm concentration ratio?

The following example outlines how to calculate the concentration ratio of the top 4 firms in an industry.

First, determine the market shares of each of the top 4 firms by revenue. This is done by taking the revenue of each company, dividing it by the total market revenue, and multiplying by 100.

In this example, the market shares are as follows:

MS1 = 10%

MS2 = 12%

MS3 = 40%

MS4 = 20%

Finally, sum all of the market shares together to get the 4-firm concentration ratio.

4CR = MS1 + MS2 + MS3 + MS4

4CR = 10 + 12 + 40 + 20

4CR = 82%

The four largest firms hold 82% of the market. This concentration measure alone does not determine competitive conditions.