Description

Industrial concentration refers to a structural characteristic of the business sector. It is the degree to which production in an industry or in the economy as a whole is dominated by a few large firms. Once assumed to be a symptom of “market failure,” concentration is, for the most part, seen nowadays as an indicator of superior economic performance.

Market structure represents the number and size distribution of firms, as we11 as entry barriers for potential competitors. Competition among firms provides internal and allocative efficiency with reward to the consumers and sellers. In a market, few dominant firms may enjoy economic power and charge higher prices to extract excess profits. The inefficiency of monopolized markets and the efficiency of competitive ones are a major justification for the key role that antitrust policy plays in most market economies.