Kno-how! on market concentration

The example below is the June 2008 figures for market share in the UK food retail sector.

MARKET SHARE % (CUMULATIVE MARKET SHARE %)
Tesco 31.2 (31.2)
Asda (Wal-Mart)16.8 (48.0)
Sainsbury’s 15.9 (63.9)
Morrisons (Safeways) 11.4 (75.3)
Co-operative (Somerfield)8.1 (83.4)
Waitrose
3.9
87.3
Aldi
2.9
90.2
Lidl
2.3
92.5
Iceland
1.7
94.2

1. A pure monopolist in an industry is a single seller. It is quite rare for a firm to have a pure monopoly – except when the industry is state-owned and has a legally protected monopoly. The Royal Mail used to have a statutory monopoly on delivering household mail. But this is now changing fast as the industry has been opened up to fresh competition.

2. A working monopoly: A working monopoly is any firm with greater than 25% of the industries' total sales. In practice, there are many markets where businesses enjoy some degree of monopoly power even if they do not have a twenty-five per cent market share.

3. A dominant firm is a firm that has at least forty per cent of their given market