According to the inverted-U theory of R&D, other things equal, firms in industries with concentration ratios around 10 percent will be more technologically progressive than firms in industries with 50 percent concentration ratios.

Concentration Ratios

Measures that indicate the degree of market concentration by showing the market share of the largest firms in an industry.

Inverted-U Theory

A hypothesis that suggests there is a relationship between the level of some activity and the effect it has on performance, which looks like an inverted U, indicating optimal performance at an intermediate level of the activity.

Technologically Progressive

Pertaining to the consistent application and incorporation of new technologies to improve processes, products, or services.