The current industry concentration ratio is 85 percent but if you look at the industry in the early 2000s, it had a four-firm concentration ratio of 45 percent. That is why I say “industry” has a four-firm concentration ratio of 85 percent.
With the current industry concentration ratio, an industry with four firms is going to have more than twice as many people in it as one with two firms. If you divide the total number of people in the industry by the total number of people in the industry, you get an industry having a four-firm concentration ratio.
This is just one of those things that seems counterintuitive, but it is indeed true. The reason that this is counterintuitive is because one firm is able to have almost twice as many workers as another. As a result, the industry in which they are the dominant firm is going to be much healthier than the industry in which they are the least viable firm.
The number of industries in the U.S. that have four-firm concentration ratios fall into three categories: small firms, midsize firms, and large firms. The industry in which a firm is the dominant firm is much healthier than the industry in which they are the least viable firm.
It’s true that companies with higher concentration ratios have more workers so they need to pay a higher wage to attract and retain the same number of workers, but it’s also true that firms with higher concentration ratios are less effective at paying workers the right wages for the right jobs. They are also less effective at keeping job candidates in the field. Small and midsize firms have higher concentration ratios because they have fewer employees and so their wages are higher.
One reason you see this four-firm concentration ratio is because of the increasing complexity of the industry itself. The number of employees in a firm is directly related to the number of decisions they need to make. If a firm does everything correctly, it can hire and retain a higher number of employees than a firm that is just one-third as competent.
While it isn’t a perfect correlation, it is true that the number of employees in a firm is directly related to the number of decisions it needs to make. That is, if a firm’s employees are all doing the same thing, they all need to make the same decisions. If a firm needs to hire and retain a higher number of employees, it will require a larger number of decisions to hire and retain that particular employee.
Companies that hire and retain a larger number of employees are also more likely to be profitable. In fact, a four-firm concentration ratio is one of the most important factors in determining whether a company will make money or not.
An industry that has a four-firm concentration ratio of 85 percent is one that hires a larger number of employees than it retains, and that is a company that will have high employee turnover. For example, a company that had three employees last year would need to hire another employee, and that employee would need to be replaced.
A two-firm concentration ratio is one where a company hires the same number of people as it retains. For example, a company that had two employees last year would need to hire two more employees, and that employee would replace the two that were already hired.