Question

A market has four firms that each make up 25% of the market share. The Herfindahl-Hirschman Index (HHI) of concentration for this market is ____________

Answer 1

The Herfindahl-Hirschman Index (HHI) measures the concentration of a market. In this case, with four firms each having a 25% market share, the HHI would be 0.25.

Step-by-step explanation:

The Herfindahl-Hirschman Index (HHI) measures the concentration of a market. It is calculated by summing the squares of the market shares of all firms in the market. In this case, since each of the four firms has a 25% market share, the HHI for this market would be 4 * (0.25)^2 = 0.25.