If an industry is made up of five firms with market shares of 25%, 20%, 20%, 20%, and 15%, its Herfindahl-Hirschman Index is

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The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For this industry, the calculation would be: $25^2 + 20^2 + 20^2 + 20^2 + 15^2 = 625 + 400 + 400 + 400 + 225 = 2050.$

If an Industry Is Made Up of Five Firms with Market