The ranking of industries by the four-firm concentration ratio usually,but not always,reveals the same pattern as ranking by HHI.When a discrepancy is found it is usually due to the following:

Question

Quizplus · Accepted Answer

The discrepancy between the rankings by the four-firm concentration ratio and HHI is usually due to the fact that the four-firm concentration index considers only the four largest firms in the industry, while the HHI takes into account all firms, and also because the HHI uses squared market shares whereas the four-firm concentration ratio does not. Therefore, choice C, which combines both explanations, is the best answer.

The Ranking of Industries by the Four-Firm Concentration Ratio Usually,but