Consider two industries, industry W and industry X.In industry W there are five companies, each with a market share of 20% of total sales.In industry X, there are six companies.One company has a 50% market share and each of the other five firms has a market share of 10%.
a.Calculate the four-firm concentration ratio for each industry.
b.Calculate the Herfindahl-Hirschman Index (HHI)for each industry.
c.What do the values of the two concentration measures imply about the degree of market power in the two industries?

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The Answer of Consider two industries, industry W and industry X.In industry W there are five companies, each with a market share of 20% of total sales.In industry X, there are six companies.One company has a 50% market share and each of the other five firms has a market share of 10%.
a.Calculate the four-firm concentration ratio for each industry.
b.Calculate the Herfindahl-Hirschman Index (HHI)for each industry.
c.What do the values of the two concentration measures imply about the degree of market power in the two industries?

Consider Two Industries, Industry W and Industry X