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What is the Rule Of Three?

 , updated on August 16, 2016
The rule of three is the economic theory that large mature markets are typically dominated by three competitors. The theory suggests that a new industry with hundreds of competitors will experience mergers, acquisitions and shakeouts that see three large firms emerge. The rule of three also suggests that a firm that dominates an industry with few competitors is vulnerable to competition. Large dominant firms tend to become less responsive to customers and innovation, opening up space for a competitor or two.
Overview: Rule Of Three
Type
Business Theory
Economics
Definition
The theory that large mature markets are typically dominated by three competitors.
Value
Identifying competitive opportunities and risks.
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