Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Herfindahl index (also known as Herfindahl-Hirschman Index, HHI, or sometimes HHI-score) is a measure of the size of firmsLinks to an external site. in
The Herfindahl index (also known as Herfindahl-Hirschman Index, HHI, or sometimes HHI-score) is a measure of the size of firmsLinks to an external site. in relation to the industryLinks to an external site. and an indicator of the amount of competition among them. Named after economists Orris C. HerfindahlLinks to an external site. and Albert O. HirschmanLinks to an external site., it is an economicLinks to an external site. concept widely applied in competition lawLinks to an external site., antitrustLinks to an external site. and also technology management. It is defined as the sum of the squares of the market sharesLinks to an external site. of the firms within the industry (sometimes limited to the 50 largest firms), where the market shares are expressed as fractions. The result is proportional to the average market share, weighted by market share. As such, it can range from 0 to 1.0, moving from a huge number of very small firms to a single monopolisticLinks to an external site. producer. Increases in the Herfindahl index generally indicate a decrease in competition and an increase of market powerLinks to an external site., whereas decreases indicate the opposite. Alternatively, if whole percentages are used, the index ranges from 0 to 10,000 "points". For example, an index of .25 is the same as 2,500 points
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started