Final answer:
The industry is highly concentrated since the four largest steel producers in Canada control 85 percent of the market. The four-firm concentration ratio suggests a limited competition. Market concentration is also affected by globalization, which tends to lower such concentration on a global scale.
Step-by-step explanation:
When the four largest steel producers in Canada control 85 percent of total Canadian market sales, this industry would be described as highly concentrated. A concentrated market implies that a small number of companies hold a large market share, thereby potentially limiting competition. This scenario contrasts with a fragmented or diversified market, where the market share is spread out among many competitors. It should also not be confused with a saturated market, where the market is fully 'saturated' with products to the point where additional sales are difficult to achieve.
Market concentration can be measured using tools like the four-firm concentration ratio, which provides an indication of how much market power the top firms have. However, while the four-firm concentration ratio can show how concentrated a market is, it does not give the full picture of competition levels. The Herfindahl-Hirschman Index (HHI) provides a more detailed analysis, as it takes into account the distribution of market shares among the top firms. For a holistic view of competition, it's essential to also consider global influences brought about by globalization, which often lowers the concentration ratio in an international context compared to a domestic one.