How is the CR index calculated?Let s talk about how to use industry concentration

Mondo Finance Updated on 2024-01-29

The CR index is a measure of the sum of the market share of the top N largest companies in an industryIndustry Concentration Index。It can be used to analyze the competitive landscape of an industry, as well as the market position of the companies in the industry.

The formula for calculating CRN is as follows:

Among them, SI is the market share of the ith company, and n is the largest number of companies in the industry. For example, CR4 refers to the four largest players holding that relevant market share. Similarly, the concentration rate of five firms (CR5) and the concentration rate of eight firms (CR8) can be calculated.

For example, let's say there are 10 companies in an industry with a market share of %.

Then, the formula for calculating CR4 is:

cr4=s1+s2+s3+s4=10%+10%+10%+10%=40%

Therefore, the CR4 is 40%. Similarly, CR5 and CR8 can be calculated in a similar way.

The CR index can be used to analyze the degree of market competition in an industry and the market position of companies in the industry. For example, when the CR index is high, it indicates that the top companies in the industry have a larger market share, a lower degree of market competition, and a more stable market position of the companies in the industry. On the contrary, when the CR index is low, it indicates that the market share of the top companies in the industry is smaller, the degree of market competition is higher, and the market position of the companies in the industry is more unstable.

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