CR4s

CR4s is the plural form of CR4, a widely used market-concentration metric in economics. A CR4 value represents the combined market share of the four largest firms in a defined market, typically measured by revenue or production. The term CR4s is used when the four-firm concentration ratio is compared across multiple markets, time periods, or jurisdictions.

To compute a CR4 for a given market, define the market boundary, identify the four largest firms by estimated size, determine each firm’s share of the relevant measure (such as sales or output), and sum these four shares. The resulting percentage indicates the portion of the market controlled by the top four firms.

CR4s are commonly used to gauge competition levels, inform antitrust analyses, and support regulatory reviews. They offer a simple, interpretable summary of market power compared with more granular measures, such as the Herfindahl-Hirschman Index (HHI), but provide a coarser view of concentration.

Limitations include sensitivity to how the market is defined, as small changes in boundaries can alter which firms are in the top four. CR4s ignore the distribution of the remaining firms and do not directly reflect price competition or dynamic factors like entry and innovation. They should be interpreted alongside other indicators and with attention to market context.

Related metrics include CR6 and CR8, as well as the HHI, which together can provide a more nuanced picture of market concentration and competition.