Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and 10 percent, respectively. The Herfindahl index for the industry is

Name: Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and 10 percent, respectively. The Herfindahl index for the industry is
Brand: Quizplus
Rating: 4.8 (67 reviews)

Question

Quizplus · Accepted Answer

The Herfindahl index is calculated by squaring the market share of each firm and then summing the results: (30^2) + (30^2) + (20^2) + (10^2) + (10^2) = 900 + 900 + 400 + 100 + 100 = 2,400.

Suppose the Firms in a Five-Firm Industry Have Market Shares