Market share is the proportion of Product outputs from a market that is supplied by a specific Activity. This metric quantifies an activity's contribution to the total supply of a particular product within a defined market boundary.
In Life Cycle Assessment, market share is typically measured by comparing an activity's annual production volume to the total annual product output from the market. For example, if a cement manufacturer produces 500,000 tonnes of cement per year and the total market output is 5,000,000 tonnes per year, that manufacturer's market share would be 10%.
Market share plays a crucial role in LCA modelling, particularly in consequential Life Cycle Assessment where understanding market dynamics is essential. When modelling market activities, market share determines how different suppliers contribute to the consumption mix that reaches end users. This weighting reflects the reality that when a product is demanded from a market, it is typically supplied by multiple producers in proportion to their market shares.
The concept is closely related to production mix and supply mix in LCA terminology. A production mix represents the production-volume-weighted average of suppliers within a geographical area, whilst a supply mix additionally includes imports to that area. Market share data forms the foundation for calculating these weighted averages, ensuring that LCA models accurately represent the actual composition of products available in a market.
Accurate market share data is particularly important when assessing marginal changes in demand, as it helps identify which suppliers are most likely to respond to increases or decreases in product demand. This information is essential for consequential modelling approaches that seek to identify the activities affected by changes in the functional unit.
