Concentration Index

A concentration index measures how much of an industry’s activity (revenue, output, market share) is held by its largest firms. The two most common are:

• CR4 — share of the four largest firms in an industry. Cleaner conceptually, less informative on tail dynamics. A CR4 of 80 means the top four firms control 80% of the market.
• HHI — Herfindahl–Hirschman Index, sum of squared market shares of all firms. Used by US antitrust regulators (DOJ, FTC) for merger review thresholds. HHI above 2,500 is considered “highly concentrated”; mergers that increase HHI by more than 200 in concentrated markets get scrutiny.

Concentration has risen across most US industries since the 1990s. The political question is not whether — that is settled — but what it means: whether concentration produces the predicted economic harms (higher prices, lower wages, less innovation) cleanly enough to justify the regulatory response. Different schools of antitrust thinking produce different answers, which is one of the structural-power debates Thin Gold tracks.