If there are five firms in an industry and the market shares of the firms are 45 percent, 22 percent, 17 percent, 10 percent and 6 percent. The four-firm concentration ratio for this industry is __________________ percent and the Herfindahl Index is ________________.

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is the sum of the market shares of the four largest firms: 45% + 22% + 17% + 10% = 94%. The Herfindahl Index is calculated by summing the squares of the market shares: 45^2 + 22^2 + 17^2 + 10^2 + 6^2 = 2,934.

If There Are Five Firms in an Industry and the Market