Suppose Town A and Town B each have four hospitals. The following table gives the bed size and output of each hospital. Based on this above information, what is the Herfindahl-Hirschman Index (HHI) for each town? Which market (Town A or Town B) is more concentrated? Does your answer depend on how you measure hospital market shares?

Hospital Town A Town B

Size Output Size Output

(#ofbeds) (Annual # of (#ofbeds) (Annual # of

Pt. discharge) Pt. discharge)

A 250 8,000 150 2,200

B 250 7,300 50 1,100

C 250 6,400 500 16,000

D 250 5,400 350 10,000