If there are four firms in an industry and each has a 25 percent market share, then the Herfindahl-Hirschman Index equals

Name: If there are four firms in an industry and each has a 25 percent market share, then the Herfindahl-Hirschman Index equals
Brand: Quizplus
Rating: 4.8 (54 reviews)

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For four firms each with a 25 percent market share, the calculation is 4*(25^2) = 4*625 = 2,500.

If There Are Four Firms in an Industry and Each