Four firms control the market for a particular good,resulting in an HHI of 2,900.Total industry sales are $500,and it is known that two firms each have sales of $175.If each of the remaining two firms have the same sales,then we can conclude that the remaining two firms each have a market share of:

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated as the sum of the squares of the market shares of all firms in the market. Given an HHI of 2,900 and two firms with sales of $175 each, the remaining two firms must have equal sales. Solving for the market share of the remaining firms, each has a market share of 0.15 (or 15%).

Four Firms Control the Market for a Particular Good,resulting in an HHI