This index measures the proportion represented by a fixed number of the largest companies of an industry when compared to the total of such an industry. Its cal­culation is as follows:

k

Cr (k) = Pi (1)

i=1

where к is the number of companies that are part of the calculation and Pi = participation of the ith company in the market. The index is easy to interpret, since it varies from 0 (zero) to 100. The closer it gets to 100, the higher the industry concentration is, i. e., if a small number of companies responsible for a big pro­portion of production, sales, or employment inside the industry, that means that the concentration will be higher. In this research, we will use the measure Cr(4), where the four largest companies will be considered in this analysis.

In this context, Bain and Qualls (1968) analyzes the market concentration clas­sifying markets into: Cr(4) equals or higher than 75 %: highly concentrated oli­gopoly; Cr(4) between 50 and 74 %: moderately concentrated oligopoly; Cr(4) between 25 and 49 %: weakly concentrated oligopoly; and Cr(4) lower than 25 %: atomistic.