What are the benefits and disadvantages of concentration ratio?

Advantages of the concentration ratio: It is easy to compute since we only need information on the largest n firms and aggregate industry It is easy to interpret - CR_n [n/N,1] Disadvantages n is arbitrarily chosen; different values of n can give completely different concentration measure Only takes information few points on the concentration curve Transfer of sales may not affect the ratio In practice n is often 4. However, it depends on how the industry is defined.