If the Herfindahl index is the same in two industries, we can conclude that
A)the number of firms in each industry is the same
B)there must not be the same number of firms in the two industries
C)the sum of the squared market shares of all firms is the same in the two industries
D)there must be an identical distribution of market share among firms in the two industries
E)there must be a different distribution of market share among firms in the two industries

Question

Quizplus · Accepted Answer

The Herfindahl index is a measure of market concentration that takes into account the market shares of all firms in an industry. If the Herfindahl index is the same in two industries, it means that the sum of the squared market shares of all firms is the same in both industries. Therefore, choice C is the correct answer.

If the Herfindahl Index Is the Same in Two Industries