The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of _____

Marketing Jan 11, 2021

The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of _____.

a) Market concentration.

b) Income distribution.

c) Technological progressiveness.

d) Price discrimination.

e) None of the above.

Expert Solution

The answer is a).

The Herfindahl-Hirschman index is calculated by summing the squared market shares of all firms in an industry. If the index is close to one, then the market is highly concentrated. If the index is close to zero, then the market is highly competitive. Hence, this index is a measure of market concentration.

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