The Herfindahl-Hirschman Index is the sum of the
A)Squared market shares of the firms in the market.
B)Market shares of all the firms in the market.
C)Market shares of the top four firms in the market.
D)Squared concentration ratios for the firms in the market.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration that sums the squared market shares of all firms in a market. This gives a higher weight to the largest firms in the market, reflecting their impact on competition. The formula for calculating HHI is the sum of the squared market shares of all firms in the market, where market share is defined as the percentage of total industry sales accounted for by each firm.

The Herfindahl-Hirschman Index Is the Sum of the