The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI)for this industry is ________.

Question

Quizplus · Accepted Answer

HHI = (0.4)^2 + (0.3)^2 + (0.02)^2 + 47(0.01)^2
HHI = 0.16 + 0.09 + 0.0004 + 0.0047
HHI = 0.2541
HHI x 10,000 = 2,541

The Three Largest Firms in an Industry Have Market Shares