Market Structures and Concentration Measuring Techniques

Abstract

The aim of this study is to determine the characteristics of the market structures and methods of measuring the concentration which are the most important issues of economics in recent period. Knowing the market structure and setting the level of competition is important for the policy to be followed for decision makers. In determining market structures, there are many concentration criteria such as concentration ratios, HHI, Lorenz curve, Gini coefficient, Rosenbluth index, entropy index, Linda index, Horwath index, Lerner index. The most widely used are the Company Concentration Rate (CRn) and the Herfindahl - Hirschman Index (HII). While presenting concentration criteria theoretically, it has benefited from various sources related to the subject. Concentration rate is the most common and widely used method because of its simplicity and ease of calculation. Concentration is the control of several indicators (production, sales, etc.) in a sector by few companies. The Herfindahl-Hirschman Index takes into account all firms in the sector and shows sensitivity to firm size. With concentration measurement techniques, it can be determined which of the competitive markets are in the scope of perfect competition. So, the results that are obtained can be a guide as the aspect of using the source efficiently and create the competition.