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What is the HHI for the following industry?

a. Firm 1 has a market share of 20%
b. Firm 2 has a market share of 20%
c. Firm 3 has a market share of 20%
d. Firm 4 has a market share of 10%
e. Firm 5 has a market share of 10%
f. Firm 6 has a market share of 10%
g. Firm 7 has a market share of 5%
h. Firm 8 has a market share of 5%

Answer :

gkosworldreign

Answer:

HHI = 1550

Explanation:

Herfindahl-Hirschman Index (HHI) is a popular measure of  the concentration of the market  and it is used to ascertain market competitiveness, usually pre- and post-Mergers and acquisitions (M&A)  transactions. HHI is measured by summing  the square of the idividual market share of firm competing in a market ad It has a range from close to 0 to 10,000.

HHI = 20² + 20² + 20² + 10²  + 10²  + 10²  +  5²  + 5²

=1550

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