A measure of market dominance can be obtained by summing the market shares of the largest firms within an industry. This calculation provides an indication of the degree to which a limited number of companies control the output or sales in a specific market. For example, to find the four-firm measure, the individual market shares of the four largest companies are added together.
This value serves as a gauge of competitive intensity. Higher figures often suggest greater market power concentrated in the hands of a few, potentially leading to reduced competition and potential anti-competitive behavior. Analyzing this metric allows economists and regulators to assess market structure, monitor changes over time, and inform decisions related to antitrust enforcement.