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Alexxx [7]
3 years ago
13

A Herfindahl-Hirschman Index is calculated by

Business
1 answer:
EleoNora [17]3 years ago
5 0

Answer:

Option D: Summing the squares of the market shares of each firm in the industry.

Explanation:

The Herfindahl-Hirschman index (HHI) is a use worldwide as measure of market concentration. It's calculation is based on squaring the market share of each firm competing in a market, and thereafter the resulting numbers are summed up. It commonly range known is simply from zero to 10,000. It is used by U.S. Department of Justice uses for potential mergers issues evaluation. It is a measure of industry concentration by the sum of the squares of the market shares held by each of the firms in the industry.

The Herfindahl index shows a decrease in competition and an increase of market power, when there is an increase and decreases is the opposite.

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