calculate the four-firm concentration ratio by adding the market shares of the four largest firms: in this case,

16 + 10 + 8 + 6 = 40. We do not consider this concentration ratio especially high, because the largest four firms

have less than half the market.

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11.1 • Corporate Mergers 263

If the market shares for replacing automobile windshields are:

Smooth as Glass Repair Company

16% of the market

The Auto Glass Doctor Company

10% of the market

Your Car Shield Company

8% of the market

Seven firms that each have 6% of the market 42% of the market, combined

Eight firms that each have 3% of the market

24% of the market, combined

Then the four-firm concentration ratio is 16 + 10 + 8 + 6 = 40.

TABLE 11.1 Calculating Concentration Ratios from Market Shares

The concentration ratio approach can help to clarify some of the fuzziness over deciding when a merger might
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