Purchase Solution

Herfindahl index

Not what you're looking for?

Ask Custom Question

Find the Herfindahl index for an industry composed of (a) three firms - one with 70 percent of the market, and the other two with 20 and 10 percent of the market respectively (b) one firm with 50 percent share of the market and 10 other equal sized firms (c) 10 equal sized firms.

Since under price leadership by the dominant firm, the firms in the industry following the leader behave as perfect competitors or price takers by always producing where the price set by the leader equals the sum of their marginal cost curves the following break even in the long run. True or False? Explain.

Purchase this Solution
Solution Summary

Herfindahl index calculation and price leadership concepts

Solution Preview

Herfindahl-Hirschman Index (HHI) measures of the size of firms in relationship to the industry. It is an indicator of the competitiveness in the industry. It is calculated by summing the squares of the market share of each firm. So you would calculate:

70^2 + 20^ 2 + 10^2 = 4900 + 400 + 100 = 5400

50^2 + 10* 5^2 = 2500 + 10 * 25 = 5000

10 * 10^2 = 10 ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • market power

    Herfindahl index helps in understanding the change in market power, when the Herfindahl index increases, there is an increase in market power and when there is a decrease in the Herfindahl index there is decrease in market power.

  • Herfindahl Index for Market Concentration

    What is the Herfindahl Index for the smartphone industry based on these numbers? Based on the Herfindahl Index, do you think the government would be willing to approve a merger between Apple and Samsung?

  • Calculating HHI index in the given cases

    What is the Herfindahl Index (HHI) for this industry? HHI Index=55^2+25^2+8^2+4^2+3^2+3^2+2^2=3752 b. If there were a merger between Engines, Inc. and Silver Streak, what is the new industry Herfindahl Index?

  • The Herfindahl Index

    The Herfindahl Index benefits are presented.

  • Effect of Herfindahl-index guidelines on the merger

    121513 Effect of Herfindahl-Index guidelines on the merger Determine if the justice department would challenge a merger between two firms in an industry with 10 equal-sized firms, based on its 1984 Herfindahl-Index guidelines only.

  • Six-firm concentration ratio and Herfindahl-Hirschman index

    266881 Six-Firm Concentration Ratio and Herfindahl-Hirschman Index Assume the market shares of the six largest firms in an industry are 12 percent each. Calculate the six-firm concentration ratio and Herfindahl-Hirschman index for this industry.

  • Hirschman-Herfindahl Index (HHI)

    Hirschman-Herfindahl Index (HHI) is examined.

  • Herfindahl-Hirschman index

    Herfindahl-Hirschman index and other items are calculated.

  • Herfindahl indices

    Herfindahl Index (HHI) is applied.

  • Calculating HHI index and C4 Ratio

    Calculate the Herfindahl-Hirschman index (HHI) before the merger. Show your work. d. Calculate the Herfindahl-Hirschman index (HHI) after the merger. Show your work. e. Do you think the U.S. Department of Justice would try to block the merger?

View More Related Solutions