Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 9P
To determine
(a)
To compute:
The Herfindahl-Hirschman Index (HHI) for the given situation.
To determine
(b)
To compute:
The Herfindahl-Hirschman Index (HHI) for the given situation.
To determine
(c)
To compute:
The Herfindahl-Hirschman Index (HHI) for the given situation.
To determine
(d)
To compute:
The Herfindahl-Hirschman Index (HHI) for the given situation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
What is the, HHI, Herfindahl-Hirschman Index for an industry where six companies each have a market share of 15% and one company which has a market share of 10%?
What would the Herfindahl-Hirschman Index (HHI) be in each of the following situations?
1 firm with a monopoly in the market
You are the manager in a market composed of eight firms, each of which has a 12.5 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors.
a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market.
b. Suppose that any two of these firms merge. What is the postmerger HHI?
Knowledge Booster
Similar questions
Unsure which is the correct answers
Suppose that three firms make up the entire wig manufacturing industry. One has a 50% market share, and the other two have a 25% market share each.
The Herfindahl index of this industry is a. 3,750
b. 1,000
c. 10,000
d. 5,000
e. 2,500
Mane Attraction, one of the firms with a 25% market share in the wig manufacturing industry, leaves the market. This would cause the Herfindahl index for the industry to __--
a. remain the same
b. fall
c. rise
The largest possible value of the Herfindahl index is 10,000 because:
a. an index of 10,000 corresponds to 100 firms with a 1% market share each
b. an index of 10,000 corresponds to a monopoly firm with 100% market share
c. an industry with an index higher than 10,000 is automatically regulated by the Justice
Department
arrow_forward
Carrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 14 percent, 16 percent, 20 percent, and 13 percent. a. What is the Herfindahl index for the touch screen manufacturing industry? b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? Would the government be likely to challenge that proposed merger? c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?
arrow_forward
Which of the following factors would make it more DIFFICULT for a seller in the market for coffee to collude successfully with his rivals?
A) The coffee market includes a small number of firms.
B) Firms in the coffee market place a very high value on profits earned in the present but discount significantly future profits.
C) Coffee consumers are very loyal.
D) Prices in the coffee market are relatively stable and do not change often.
E) The antitrust agencies shut down and stop looking for cartel activity.
arrow_forward
Firm
Market Share (%)
A
30
B
29
C
16
D
12
E
7
F
6
Refer to the data. Suppose that firms A and F merged into a single firm. The four-firm concentration ratio and the Herfindahl index would be
Multiple Choice
arrow_forward
Suppose that three firms make up the entire wig manufacturing industry. One has a 50% market share, and the other two have a 25% market share each.
The Herfindahl index of this industry is _____.
a. 3,750
b. 1,000
c. 10,000
d. 5,000
e. 2,500
Mane Attraction, one of the firms with a 25% market share in the wig manufacturing industry, leaves the market. This would cause the Herfindahl index for the industry to _____.
a. remain the same
b. fall
c. rise
The largest possible value of the Herfindahl index is 10,000 because:
a. an index of 10,000 corresponds to 100 firms with a 1% market share each
b. an index of 10,000 corresponds to a monopoly firm with 100% market share
c. an industry with an index higher than 10,000 is automatically regulated by the Justice Department
arrow_forward
Q1: What is the, HHI, Herfindahl-Hirschman Index for an industry where six companies each have a market share of 15% and one company which has a market share of 10%?
Q2:About fifty years ago, the EPA, Environmental Protection Agency, embraced command and control laws. Later on, the EPA made adjustments and updates. These laws and their adjustments,
a/ draws distinctions between the needs of firms and costly equipment upgrades.
b/ are given considerable credit for cleaner air and water in recent decades.
c/ were an inexpensive incentive for industrial polluters to improve performance.
d/ were necessary as US industries had zero incentive to control pollution.
arrow_forward
(Mergers and Public Policy) Calculate the Herfindahl- Hirschman Index (HHI) for each of the following industries. Which industry is the most concentrated?
An industry with five firms that have the following market shares: 50 percent, 30 percent, 10 percent, 5 percent, and 5 percent
An industry with five firms that have the following market shares: 60 percent, 20 percent, 10 percent, 5 percent, and 5 percent
An industry with five firms, each of which has a 20 percent market share
arrow_forward
Firm
Market Share (%)
A
18
B
17
C
17
D
17
E
16
F
15
Refer to the data. Suppose that firms in this industry split up such that there were 20 firms, each with a 5 percent market share. The four-firm concentration ratio and the Herfindahl index respectively would be
arrow_forward
(Mergers and Public Policy) Calculate the Herfindahl-Hirschman Index (HHI) for each of the following industries.Which industry is the most concentrated?a. An industry with five firms that have the followingmarketshares: 50 percent, 30 percent, 10 percent,5 percent, and 5 percentb. An industry with five firms that have the followingmarketshares: 60 percent, 20 percent, 10 percent,5 percent, and 5 percentc. An industry with five firms, each of which hasa 20 percent market share
arrow_forward
Firm
Market Share (%)
A
20
B
20
C
20
D
20
E
10
F
10
Refer to the data. If all the firms in the industry merged into a single firm, the Herfindahl index would become
Group of answer choices
100.
1,000.
10,000.
100,000.
arrow_forward
Suppose, Pfizer Company is the only company allowed by the Sultanate government to sell COVID vaccine in Oman. According to you, what type of market Pfizer Company is having in Oman?
a.
Monopoly market
b.
Monopolistic market
c.
Competitive market
d.
Oligopoly market
arrow_forward
Suppose an industry that has 10 firms. Below are the market shares for 2008 and 2013 of the 10 firms.
Market Share
Firms
2008
2013
A
B
C
D
E
F
G
H
I
G
26%
21%
16%
10%
9%
7%
4%
3%
2%
2%
22%
23%
19%
9%
8%
7%
6%
4%
1%
1%
Calculate the concentration ratio CR4 and the concentration ratio CR8 for 2008 and 2013
Calculate the Herfindahl-Hirschmann Index (HHI) for 2008 and 2013
Using the CR4, CR8, and HHI, analyze the evolution of the seller concentration in the industry. Has the industry become more or less concentrated?
Using the CR4, CR8, and HHI, analyze the evolution of the potential market power of firms in the industry.
arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning