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Consider an industry that is made up of six firms with the following market shares: Firm...

Consider an industry that is made up of six firms with the following market shares: Firm A - 25%, Firm B - 20%, Firms C and D - 8% each, Firm E - 9%, and Firms G and H - 15% each. What is the value of the Herfindahl-Hirschman Index?

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Answer #1

HHI = sum of the square of the market share of each firm in the market

= 25^2+20^2+8^2+8^2+9^2+15^2+15^2

= 625+400+64+64+81+225+225

= 1684

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