Compute the four-firm concentration ratio

Reference no: EM133466132

Assignment:

Consider two industries, each comprising ten firms. In industry 1, the largest firm has a market share of 49 percent. The next three firms have market shares of 7 percent each, and the remaining six firms have equal shares of 5 percent each. In industry 2, the top four firms share the bulk of the market with 19 percent apiece. The next largest firm accounts for 14 percent, and the smallest five firms equally split the remaining 10 percent of the industry.

a) Compute the four-firm concentration ratio and HHI for each industry. Compare these measures across the two industries. Which industry do you think truly exhibits a more competitive structure? Which measure do you think gives a better indication of this?

b) Now assume that the three second largest firms in industry 1 merge their operations while holding on to their combined 21 percent market share. Recalculate the HHI for industry 1.

Please write out the solution clearly.

If you use CHAT GPT, I will DOWN VOTE and CONTACT Course Hero! Those answers are all wrong.

Reference no: EM133466132

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