Question

A market has four main firms with the following market shares: Firms A 62% Firms B= 20% Firms C= 10% The Herfindahl-Hirschman Index (HHI) = Firms D= 8% so this market is called

Answer 1

Based on the given market shares, the Herfindahl-Hirschman Index (HHI) can be calculated as follows:

HHI = (Market Share A)^2 + (Market Share B)^2 + (Market Share C)^2 + (Market Share D)^2

HHI = (0.62)^2 + (0.20)^2 + (0.10)^2 + (0.08)^2
HHI = 0.3844 + 0.04 + 0.01 + 0.0064
HHI = 0.4408

According to the U.S. Department of Justice guidelines, a market with an HHI between 1,500 and 2,500 is considered a moderately concentrated market. However, since the HHI in this case is 0.4408, which is significantly lower than the threshold, it indicates that the market is not concentrated.