Market concentration is the control of a large proportion of total sales by a small number of firms in an industry, leading to reduced COMPETITION. Economists and government regulators monitor market concentration closely. The FEDERAL TRADE COMMISSION and the Antitrust Division of the U.S. Justice Department sometimes block mergers of firms in an industry based on reduced competition through market concentration. While there was a significant increase in mergers among major CORPORATIONs in the United States during the 1990s, most economists think market concentration has declined since the 1930s. Market concentration is measured using two concentration ratios. The U.S. Department of Commerce developed a four-firm ratio adding together the percentage of output by the four largest U.S. firms. The closer the sum of their output is to 100 percent, the more concentrated the industry. For example, in 1992 the top four U.S. firms produced 93 percent of cigarettes, 85 percent of the cereal PRODUCTs, and 90 percent of beer produced in the country. Each of the markets is highly concentrated, and participating firms engage in many OLIGOPOLY market practices, including nonprice competition, price matching, and price leadership. These PRICING STRATEGIES reduce price competition, creating higher prices for consumers. The most commonly used market concentration ratio is the HERFINDAHL INDEX, which measures concentration using the sum of the squares of the market shares of firms in an industry. Using the sum of the square of a firm’s market share increases the weight in the index in markets where one or two firms have a major share of the market. The U.S. Justice Department has stated that markets with a Herfindahl Index of less than 1,000 are highly competitive; those with indexes between 1,000 and 1,800 are moderately competitive; and those with indexes greater than 1,800 are highly concentrated. Herfindahl Index values are often cited by the Justice Department when deciding whether or not to intervene in a corporate merger or takeover proposal. The problem with market-concentration ratios is defining the market. In 2001, three firms—AT&T;, Sprint, and MCI WorldCom—dominated the long-distance telephonecommunications market. But increasingly Americans are communicating by use of the INTERNET, fax, and wireless systems. How the U.S. telecommunications market is defined significantly affects any measure of market concentration.