IN industrial organization, it is commonly accepted that concentration ratios are useful indices of market power and that a positive relationship exists between these indices and profitability. Contrary to what is sometimes argued,1 theoretical bases can be found to support these views. For example, in his 'theory of oligopoly', G. Stigler [I6] has shown that the effectiveness of collusion leading to joint profit maximization strategies is increased by fewness of sellers and disparity of relative seller size. T. Saving [15] has established within the confines of the static price leadership model, that con- centration ratios expressed by the share of the k largest firms can be related to the Lerner measure of the degree of monopoly. More recently, D. Encaoua and A. Jacquemin [i], have derived equilibrium relations between measures of concentration and aggregated Lerner indices for a whole set of static and dynamic, co-operative and non-co-operative, oligopoly models