To calculate the Herfindahl index,
A)add the market shares of all firms in an industry
B)add the market shares of any four firms in an industry and then square them
C)add the market shares of the four largest firms in an industry
D)square the market shares of all firms in an industry and then add them
E)square the market shares of the four largest firms in an industry and then add them

Question

Quizplus · Accepted Answer

The Herfindahl index is calculated by squaring the market shares of all firms in an industry and then summing these squared values.

To Calculate the Herfindahl Index