Antitrust laws seek to ensure active competition in markets, sometimes by preventing large firms from forming through mergers and acquisitions, sometimes by regulating business practices that might restrict… A four-firm concentration ratio is one way of measuring the extent of competition in a market.

A corporate merger involves two private firms joining together. An acquisition refers to one firm buying another firm.

concentration ratio — an early tool to measure the degree of monopoly power in an industry; measures what share of the total sales in the industry are accounted for by the largest firms, typically the…. four-firm concentration ratio — the percentage of the total sales in the industry that are accounted for by the largest four firms. antitrust laws — laws that give government the power to block certain mergers, and even in some cases to break up large firms into smaller ones. Herfindahl-Hirschman Index (HHI) — approach to measuring market concentration by adding the square of the market share of each firm in the industry.