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  • Article N°12322
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Home > Glossary of competition terms

Market share

Measure for the relative size of a firm in an industry or market, in terms of the proportion of total output, sales or capacity it accounts for. In addition to profits, one of the frequently cited business objectives of firms is to increase market share. This is because market share, economies of scale and profits are often positively correlated in market economies. In competition policy analysis, market shares are an import indicator for the existence of market power. In this respect, one should not only look at the absolute market share level, but also at the market share level relative to competitors. However, even firms with large market shares do not necessarily posses market power, e.g. in cases where barriers to enter the market concerned (entry barriers) are very low and the threat of entry prevents the exercise of market power.
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