In a market with 5 firms, the first firm controls 30 percent of the market, the second firm controls 20 percent, the third firm controls 10 percent of the market, and the remaining two firms control the remainder of the market equally.
a. Calculate the Hirschman-Herfindhl Index (HHl)
b. Determine type of market share.
a) HHI = sum total of square root of the first four firms.
900 + 400 + 100 + 400 = 1800. the HHI index of the market is 1800.
b) As the HHI is above 1500 and less than 2500 this market will be considered as a moderately concentrated market place.
In a market with 5 firms, the first firm controls 30 percent of the market, the...