Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 25, Problem 3QP
To determine
Determine the difference between four-firm concentration ration and Herfindahl index.
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Students have asked these similar questions
what is the Four-firm concentration ratio (CR4)?
what is the Herfindahl-Hirshman Index (HHI)?
and how are they different?
Is it true that a merger between two firms that are not already in the top four by size can affect both the four-firm concentration ratio and the Her findahl-Hirshman Index? Explain briefly.
Suppose that a small town has six burger shops whose respective shares of the local market are (as percentages of all hamburgers sold): 26%, 20%, 18%, 14%, 12%, 10%,
What is the four-firm concentration ratio of the hamburger industry and what is the Hirchmann Herfindahl Index (HHI) for the hamburger industry in this town?
Chapter 25 Solutions
Economics (MindTap Course List)
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Similar questions
- Is it true that a merger between two films that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshmau Index? Explain briefly.arrow_forwardConsider an industry consists of three firms (Firm-A, Firm-B and Firm-C) with sales of AED300,000, AED700,000, and AED250,000; respectively. Calculate the Herfindahl-Hirschman index (HHI) for the industry. Calculate the four-firm concentration ratio (C4). Do you think the ‘Department of Justice’ (see the guideline below) would attempt to block a horizontal merger between Firm-A and Firm-C)? The Department of Justice’s Guidelines (Suppose): Suppose that the Department of Justice’s Guidelines suggest that antitrust authorities are more likely to challenge a merger when the relevant Herfindahl-Hirschman index is greater than 2,500 and the resulting increase in the index as a result of the merger is more than 200.arrow_forwardWhat would the Herfindahl-Hirschman Index (HHI) be in each of the following situations? 1 firm with a monopoly in the marketarrow_forward
- What is the significance of the Herfindahl-Hirschman Index (HHI) in measuring market concentration and how does it impact competition within an industry?arrow_forwardSuppose that the most popular car dealer in your area sells 10 percent of all vehicles. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? In that same situation, what would the four-firm concentration ratio be?arrow_forwardUse Table to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?arrow_forward
- Suppose that in the fast-food restaurant industry the four largest restaurants account for 30 %, 20%, 15%, and 5% of the market share, respectively, and the 10 other small restaurants each account for 3%. If two of the 10 small restaurants merged, other things being equal, what would be the four-firm concentration ratio (CR) and the Herfindahl-Hirschman index (HHI), respectively? Select one: a. 70% 1640 b. 70%; 1658 C. 71%; 1640 d: 71%; 1658arrow_forwardCompare two methods of monopoly regulation.arrow_forward"The Herfindahl-index (HHI) is empty and obscure, giving little clear basis for assessing the degree of actual market power". "The HHI is more broadly based and accurate than simple four-firm concentration ratios". a. Are both statements true? b. Is one ratio generally better? Explain with examples.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 Choicearrow_forwardHow do we measure a four-firm concentration ratio? What does a high measure mean about the extent of competition?arrow_forwardWhat is the significance of the Herfindahl-Hirschman Index (HHI) in measuring market concentration and competition within an industry?arrow_forward
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