Assume the market shares of the six largest firms in an industry are 15 percent each.The six-firm concentration ratio would indicate that the industry is highly concentrated,while the Herfindahl- Hirschman Index would not.

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The six-firm concentration ratio measures the market share of the six largest firms in an industry. A high concentration ratio indicates that a small number of firms control a large share of the market. The Herfindahl-Hirschman Index (HHI) is a measure of market concentration that takes into account the market shares of all firms in an industry. A high HHI indicates that the industry is concentrated, while a low HHI indicates that the industry is competitive. In this case, the six-firm concentration ratio is high, indicating that the industry is highly concentrated. However, the HHI is not high, indicating that the industry is not concentrated. This is because the market shares of the six largest firms are relatively equal.

Assume the Market Shares of the Six Largest Firms in an Industry