require only publicly accessible revenue data. Concentration ratios Market concentration, also referred to as industry concentration, refers to the extent of which market shares of the largest firms in the market account for a significant portion of the economic activities quantifiable by various metrics such as sales, employment, active users. Recent macroeconomic market power literature indicates that concentration rations are the most frequently used measure of market power. Measures of concentration summarise the share of market or industry activity accounted for by large firms. An advantage of using concentration as an empirical tool to quantify market power is the requirement of only needing revenue data of firms which results in the corresponding disadvantage of the inconsideration of costs or profits. N-firm concentration ratio The N-firm concentration ratio gives the combined market share of the largest N firms in the market. For example, a 4-firm concentration ratio measures the total market share of the four largest firms in an industry. In order to calculate the N-firm concentration ratio, one usually uses sales revenue to calculate market share, however, concentration ratios based on other measures such as production capacity may also be used. For a monopoly, the 4-firm concentration ratio is 100 per cent whilst for perfect competition, the ratio is zero. Moreover, studies indicate that a concentration ratio of between 40 and 70 percent suggests that the firm operates as an oligopoly. These figures are viable but should be used as a 'rule of thumb' as it is important to consider other market factors when analysing concentration ratios. An advantage of concentration ratios as an empirical tool for studying market power is that it requires only data on revenues and is thus easy to compute. The corresponding disadvantage is that concentration is about relative revenue and includes no information about costs or profits. Herfindahl-Hirschman index The Herfindahl-Hirschman index (HHI) is another measure of concentration and is the sum of the squared market shares of all firms in a market. For example, in a market with two firms, each with 50% market share, the HHI equals = 0.502 + 0.502 = 0.50. The HHI for a monopoly is 1 whilst for perfect competition, the HHI is zero. Unlike the N-firm concentration ratio, large firms are given more weight in the HHI and as a result, the HHI conveys more information. However the HHI has its own limitations as it is sensitive to