How Concentrated Is the Typical US Industry? #
Most US industries are not dominated by a handful of companies. Across the 803 industries for which the Census Bureau published a 2022 concentration ratio, the four largest firms held a median 29.9% of industry sales, by our calculation from Economic Census data.
Only a small group is dominated outright. In 6.5% of those industries, the four largest firms hold three-quarters or more of sales.
| Share of sales held by the four largest firms | Industries |
|---|---|
| Under a quarter | 328 |
| A quarter to a half | 296 |
| A half to three-quarters | 127 |
| At least three-quarters | 52 |
Industry Groups Where a Few Firms Dominate #
Among the 240 four-digit industry groups with a 2022 figure, these are some where the four largest firms hold more than half of sales:
| Industry group | Share held by the four largest firms |
|---|---|
| Tobacco manufacturing | 90.6% |
| Household appliance manufacturing | 64.1% |
| Aerospace product and parts manufacturing | 63.4% |
| Sound recording industries | 62.7% |
| Iron and steel mills and ferroalloy manufacturing | 59.5% |
| Amusement parks and arcades | 56.7% |
Source: Census Economic Census (2022). These are broad groups; each contains narrower industries whose ratios can differ sharply from the group figure.
The pattern in the list is not accidental. Heavy manufacturing appears repeatedly because the capital required to enter is large and the efficient scale is high, which limits how many firms an industry can support. Where the list includes a service industry, the barrier is usually rights, catalog or licensing rather than plant.
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Where No Firm Dominates #
At the other end, the four largest firms in foundation, structure and building exterior contracting hold 1.8% of sales, and in personal care services the four largest hold 3.4% (Census Economic Census, 2022).
In industries like these, even the four largest companies together account for a small fraction of what the industry sells.
These are industries delivered locally and bought locally. A contractor competes within a travel radius, and a hair salon competes within a neighbourhood, so national scale confers little advantage and the national ratio sits close to zero by construction. That is the clearest illustration of why a low national ratio is not evidence of easy competition on the ground: the relevant market for a salon is a few streets, and within those streets the concentration can be total.
What the Ratios Measure #
The concentration ratio is the share of an industry's sales earned by its four largest companies. It is easy to read and it discards a great deal: it says nothing about the fifth-largest firm, and nothing about whether the top four are evenly matched or one of them is most of the total.
The Herfindahl-Hirschman Index adds up the squared market shares of the largest companies, so it rises sharply when one or two firms are very large. Two industries can report the same four-firm ratio and very different indices, and where they do, the index is describing something the ratio cannot: whether the industry has a leader or a group of rivals.
An HHI is available for 615 of the 803 industries, and 20 of them are above 1,800, which the 2023 federal Merger Guidelines treat as highly concentrated.
For definitions and worked examples, see our guide to market concentration.
Why the Level You Ask About Changes the Answer #
Concentration is published at every level of the classification, from broad sectors down to detailed industries, and the figures at different levels are not weaker and stronger versions of the same answer. They are answers to different questions.
Finance and insurance is the clearest case. As a whole sector, the four largest firms hold 12.1% of sales (Census Economic Census, 2022), which reads as an unconcentrated industry. Inside that same sector sits securities and commodity exchanges, where the four largest hold 95.1%, the highest of any four-digit group with a 2022 figure.
Both figures are correct. The sector figure is close to meaningless, because a sector is not a market: nobody chooses between a commodity exchange and a car loan, so measuring their combined concentration answers nothing. The narrower figure describes something real.
Why This Data Arrives Every Five Years #
Concentration ratios come from the Economic Census, which the Census Bureau conducts once every five years. There is no annual series, no quarterly update and no estimate between rounds.
The published rounds are 2012, 2017 and 2022. The next figures will come with the 2027 Economic Census, which means the 2022 ratios will remain the current ones for several more years.
Two consequences follow. The first is that any concentration figure presented as current is really the most recent census, and a source that does not say which census year it used is leaving out the most important thing about the number. The second is that a merger completed after the census does not appear in the data at all, so the ratios describe the industry structure of the census year rather than of today.
Not every industry carries a figure in every round, so a missing ratio is a gap in publication rather than a statement that an industry is unconcentrated. Our page on how accurate federal data is covers where that coverage stops.
How We Calculated It #
We took every six-digit industry for which the 2022 Economic Census published a four-firm concentration ratio, 803 in all, and grouped them by the share held by the four largest firms. Industries whose most recent figure dates from the 2017 Economic Census are left out, so every industry in the count is measured in the same year.
The median, the groupings and the shares are our calculation from the published ratios; the ratios themselves are Census figures and are not adjusted. Counts of industries above and below a threshold are counts of published ratios, not estimates for industries without one.
The published ratio for a specific industry is included in our Standard industry reports wherever Census publishes one for that industry. Census does not publish a ratio for every industry in every round.