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Abstract This paper discusses measures of industry concentration—the concentration ratio, the Herfindahl index and a new measure developed by the authors—both analytically and empirically. The analytical analysis consists of developing a set of properties which we argue all measures of concentration should possess. Although the concentration ratio is shown to be deficient on analytical grounds it appears to yield estimates of concentration not too different from the Herfindahl index and the measure devised by the authors.
Hall et al. (Wed,) studied this question.