Concentration (Economics)

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  • The extent to which a number of firms account for a proportion of sales in an industry. Concentration is said to be high when very few firms account for a high percentage of sales in an industry. This is a propensity toward monopolizing an industry.

    The U.S. government has traditionally discouraged trusts or combinations in restraint of trade since the 19th century, when antitrust laws were passed to promote a much more favorable competitive market environment. Prominent statutes to check conspiracy and restraint of trade include the Sherman Anti-Trust Act of 1890, the Clayton Act of 1914, and the Robinson-Patman Act of 1936.

    Preference for competition, unlike in the monopolistic structure, is based on the view that competition leads to efficiency, reasonable prices (hence, improved welfare), ...

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