If there are 10 equal-sized firms in an industry,the Herfindahl-Hirschman index would be:

Question

Quizplus · Accepted Answer

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 10 equal-sized firms, each would have a market share of 10%. Squaring this (0.1^2) gives 0.01 or 1% per firm. For 10 firms, this sums to 10 * 1% = 10%. Since HHI is often expressed in points out of 10,000 (to avoid dealing with decimals), this result is multiplied by 10,000, giving an HHI of 1,000.

If There Are 10 Equal-Sized Firms in an Industry,the Herfindahl-Hirschman