Question

Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows:

Answer 1

This is supposed to measure the market share concentration of industries all in the same area. I take it a low HHI is not very concentrated and a large number (10000) means that the market share is very concentrated. The answer I get is about 1700 which means there is not much concentration.

Firm                       %                         % squared

a                             30                        900

b                             20                        400

c                              10                         100

d                              10                          100

e                               10                         100

f                                  5                           25

g                                 5                           25

h                                 5                           25

j                                   5                          25

Total                       100%                     1700

So to get an idea how concentrated everything is, you square the % s and add them up. I don't think the there is a monopoly in this industry. It is pretty evenly spread out.