What is the hirfindahl-hirschman index, Corporate Finance

Assignment Help:

What is the Hirfindahl-Hirschman Index?

A:
The Hirfindahl-Hirschman Index, or HHI, is the standard measure used by economists to evaluate market concentration. The greater the level of concentration among competitors, the higher the HHI. The HHI runs on a scale from zero (representing extreme competitiveness) to 10,000 (representing monopoly). The HHI is determined by squaring (multiplying by itself) the market share of each firm in a market, and then adding up the results. The example below illustrates this calculation.

Example Calculation for a Hypothetical Market With HHI of 2,000

Competitor

Market Share %

HHI

Bank #1

29

841

Bank #2

24

576

Bank # 3

19

361

Bank # 4

10

100

Bank # 5

10

100

Bank # 6

4

16

Bank # 7

2

4

Bank # 8

1

1

Bank # 9

1

1

Total Market

100

2,000

(Hirfindahl-Hirschman Index Source: Federal Reserve)

 

 


Related Discussions:- What is the hirfindahl-hirschman index

Lrr, how do you calculate it

how do you calculate it

Find the expected return and standard deviation, Question: (a) You are...

Question: (a) You are given the following information on two risky assets A and B. E(X) = 25% E(Y) = 30% Var (X) = 16% Var (Y) = 49% The correlation matr

Explain foreign exchange market, Question: a) Using illustrative and ...

Question: a) Using illustrative and numerical examples, differentiate between arbitraging and speculation in the context of foreign exchange market. b) One year borrowing

Time Value of Money, Assume that the average age of the worker is 25 years ...

Assume that the average age of the worker is 25 years old. Typically, retirement is at 65. The firm provides a $2000 monthly payment for 25 years for retirees (i.e., 300 monthly

Derive the fund separation theorem, Question 1: (a) What are the compe...

Question 1: (a) What are the competing theories which have been put forward to explain the term structure of interest rates? Which theories do the evidence tend to support?

Preview division - forecasting methods, Preview division divides M proporti...

Preview division divides M proportional to preview demand, i.e., each SKU n 2N gets fraction This method is included because it is used by the case company, in combination

What are the consequences of a budget deficit, Question 1: (i) How do ...

Question 1: (i) How do economists go about studying the economics of the public sector? Describe the four stages of analysis (ii) The level of government intervention dif

Cash budget, You have been asked to prepare a cash budget for Whitborrow pl...

You have been asked to prepare a cash budget for Whitborrow plc for the next three months, October, November and December. The Managers are concerned that they may not have suffici

LEVERAGE, what will be impact on the operating leverage of a firm if it pr...

what will be impact on the operating leverage of a firm if it proceeds for additional borrowings

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd