Measures of industrial concentrations are designed to measure the ability to control prices.

Question

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Measures of industrial concentration, such as the Herfindahl-Hirschman Index (HHI) or the concentration ratio, are used to assess the degree of market power within an industry, which directly relates to the ability of firms to control prices. Higher concentration levels indicate fewer competitors and potentially greater power to influence prices.

Measures of Industrial Concentrations Are Designed to Measure the Ability