Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and...
Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and 10 percent, respectively. The Herfindahl index for the industry is
Multiple Choice
A) 1,900.
B) 2,400.
C) 90.
D) 10,000.
Homework Answers
HHI INDEX = SUM OF SQUARE OF MARKET SHARE=900+900+400+100+100= 2400.
Hence correct answer is Option B.
HHI index measures competitive structure of the industry.
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