Purchase Solution

Calculating HHI and Concentration Ratio

Not what you're looking for?

Ask Custom Question

Need help with homework assignment. Submit in word document.

An industry consists of three firms with sales of $300,000, $700,000, and $250,000.

a. Calculate the Herfindahl-Hirschman index (HHI).

b. Calculate the four-firm concentration ratio.

c. Do you think the Department of Justice would attempt to block a horizontal merger between the two firms with sales of $300,000 and $250,000? Explain.

Purchase this Solution
Solution Summary

Solution describes the steps to calculate HHI index and concentration ratio in the given case.

Solution Preview

An industry consists of three firms with sales of $300,000, $700,000, and $250,000.

a. Calculate the Herfindahl-Hirschman index (HHI).
Market share of firm1 =300000/(300000+700000+250000)=24%
Market share of firm2 =700000/(300000+700000+250000)= 56%
Market share of firm3 ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
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.

Elementary Microeconomics

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

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

  • Concentration Ratios and the Herfindahl-Hirschman Index

    In industry D, the 3-firm concentration ratio is 95% and the 4-firm concentration ratio is 100%. b) The Herfindahl-Hirschman Index (HHI) is the sum of the squares of the firms' market shares. In industry C, the HHI is 4(0.25^2) = 0.25.

  • Calculating HHI index and C4 Ratio

    Solution describes the steps to calculate HHI index and four-firm concentration ratio in the given case. It also checks whether given merger will be blocked by U.S. Department of Justice.

  • Herfindahl-Hirschman index

    -Calculate the four-firm concentration ratio (C4) before the merger. -Calculate the Herfindahl-Hirschman index (HHI) before the merger. -Calculate the four-firm concentration ratio (C4) after the merger.

  • Four firm concentration ratio and HHI

    b. calculate the HHI (Herfindahl Index) Please see the attached file. The four firm concentration ratio and the HHI (Herfindahl Index) have been calculated.

  • Firm Concentration Ratio & Merging

    What now will be the concentration ratio in the industry? 4. Suppose that after they merge, firms A and F go out of business. What now will be the concentration ratio in this industry?

  • HHI Index

    In the attachment I am calculating HHI and Four Firm Ratio before and after the merger and both indicate moderate concentration. The solution does a great job of answering the question.

  • Mergers and industry consolidation

    Calculate the Herfindahl-Hirschman index (HHI) before the merger. Show your work. b. Calculate the Herfindahl-Hirschman index (HHI) after the merger. Show your work. c. Calculate the four-firm concentration ratio (C4) before the merger.

  • Measures of Concentration and Herfindal Index

    98695 Measures of Concentration and Herfindal Index Answer the following questions, which relate to measures of concentration: a. What is the meaning of a four-firm concentration ratio of 60 percent? 90 percent?

  • Analyzing and Calculating Production Costs

    Solutions to first two problems depicts the methodology and formulas to calculate and analyze various production costs. Solution to last problem demonstrate the steps needed to calculate HHI Index and 4-firm concentration ratio.

View More Related Solutions