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ABSOLUTE AND RELATIVE MEASURES OF CONCENTRATION RECONSIDERED *
Author(s) -
Marfels Christian
Publication year - 1971
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1971.tb00631.x
Subject(s) - mathematics , entropy (arrow of time) , measure (data warehouse) , humanities , econometrics , mathematical economics , philosophy , thermodynamics , physics , computer science , data mining
SUMMARY Frequent controversies on the mathematical consistency and the economic significance of measures of concentration suggest an analysis of the principles of concentration measurement. The well‐known division in concentration measures and inequality measures is formalized with a catalogue of desirable properties of these measures. This way, a qualifying concentration measure corresponds to an inequality measure, and vice versa . The discussion of some concentration measures shows the superiority of the entropy measure because of its axiomatic foundation. However, antitrust authorities may prefer simpler measures such as the recently proposed ‘comprehensive concentration index’ and the ‘concentration ratios’ to observe concentrated industries. On the other hand, the entropy measure should be applied for a more detailed analysis of the dynamics of economic concentration.