Industry A consists of four firms, each of which has an equal share of the market. a. Compute the Herfindahl-Hirschman index for the industry. b. Industry B consists of 10 firms, each of which has an equal share of the market. Compare the Herfindahl-Hirschman Indexes for the two industries. c. Now suppose that there are 100 firms in the industry, each with equal shares. What is the Herfindahl-Hirschman index for this industry? d. State the general relationship between the competitiveness of an industry and its Herfind- ahl-Hirschman index.

Industry A consists of four firms, each of which has an equal share of the market. a. Compute the Herfindahl-Hirschman index for the industry. b. Industry B consists of 10 firms, each of which has an equal share of the market. Compare the Herfindahl-Hirschman Indexes for the two industries. c. Now suppose that there are 100 firms in the industry, each with equal shares. What is the Herfindahl-Hirschman index for this industry? d. State the general relationship between the competitiveness of an industry and its Herfind- ahl-Hirschman index.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter9: Stocks And Their Valuation

Section: Chapter Questions

Problem 5DQ

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