The principal measure of concentration used by the Justice Department to evaluate mergers and judge market power is the
A) four-firm concentration ratio.
B) eight-firm concentration ratio.
C) Herfindahl-Hirschman Index.
D) Stone index.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is the principal measure used by the Justice Department to evaluate mergers and judge market power. It calculates the sum of the squares of the market shares of all firms in the industry, providing a more comprehensive measure of market concentration than simple concentration ratios.

The Principal Measure of Concentration Used by the Justice Department