Asked by
Ashlyn Clark
on Nov 26, 2024Verified
If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales) , you are calculating the
A) four-firm concentration ratio.
B) Herfindahl index.
C) degree of collusion.
D) Lerner index.
Herfindahl Index
A measure of market concentration used to determine the competitive landscape by summing the squares of the market shares of all firms in the industry.
Market Shares
The segment of a market dominated by a specific company or product, usually represented as a percentage.
Concentration Ratio
A measure of the total output produced in an industry by a given number of firms, usually the largest in the industry, indicating the level of market competition.
- Comprehend the application of concentration ratios and the Herfindahl index in assessing market concentration.
Verified Answer
LM
Learning Objectives
- Comprehend the application of concentration ratios and the Herfindahl index in assessing market concentration.