If an industry consists of only four firms with equal market shares, then the Herfindahl index is _____.

Question

If an industry consists of only four firms with equal market shares, then the Herfindahl index is _____.​

Quizplus · Accepted Answer

The Herfindahl index is calculated by summing the squares of the market shares of all firms in the industry. In this case, since there are four firms with equal market shares, each firm has a market share of 25%. Therefore, the Herfindahl index is (0.25^2 + 0.25^2 + 0.25^2 + 0.25^2) x 10000 = 2500.

If an Industry Consists of Only Four Firms with Equal