Suppose there are two industries and . Each of industry has four firms and their market shares in terms of sales are listed in the table below. Industry 1 2 3 4

Market share 0.9 0.04 0.03 0.03

Industry 1 2 3 4

Market share 0.25 0.25 0.25 0.25

Calculate the concentration ratio and the Herfindhal index for each industry. Which measure reflects the market power of firms in these industries better? Suppose there are identical firms in an industry. Derive and explain the upper bound and lower bound of the Herfindhal index.