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Homework answers / question archive / An industry is comprised of four firms with sales of: $600 million, $800 million $1 billion, and $1

An industry is comprised of four firms with sales of: $600 million, $800 million $1 billion, and $1

Marketing

An industry is comprised of four firms with sales of: $600 million, $800 million $1 billion, and $1.2 billion. Calculate the industry's HHI.

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The industry's HHI is 0.2654.

To find the HHI, we first comptue the market share of each firm. The total market value in the industry is:

  • 600 + 800 + 1000 + 1200 = 3600 million.

The market share of each firm is:

  • 600 / 3600 = 16.67%
  • 800 / 3600 = 22.22%
  • 1000 / 3600 = 27.78%
  • 1200 / 3600 = 33.33%

HHI is the sum of squared market shares, i.e.,

  • (16.67%)2+(22.22%)2+(27.78%)2+(33.33%)2=0.2654

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