In an industry there are only 20 firms and each of them has equal share. Compute Herfindahl Hirschman Index and state the level of concentration in the industry.

Question

Quizplus · Accepted Answer

HHI = (n1^2 + n2^2 + ... + n20^2) * 100
Since each firm has an equal share, the market share for each firm is 1/20 = 0.05
HHI = (20 * 0.05^2) * 100 = 500
An HHI of 500 indicates low concentration in the industry.

In an Industry There Are Only 20 Firms and Each