Question

Five firms exist in the Liagiba industry. Their respective market shares are 35, 25, 15, 15, and 10 percent. Five firms exist in the Haras industry. Their respective market shares are 35, 30, 25, 8, and 2 percent.

Required:
What is the Herfindahl index for the both industries?

Answer 1

Answer:

Liagiba industry = 2400

Haras industry = 2818

Explanation:

The HHI is calculated by squaring the market share of each firm in the industry.

Liagiba industry = 35² + 25² + 15² + 15² + 10² = 1225 + 625 +225 + 225 + 100 = 2400

Haras industry = 35² + 30² +25² + 8² + 2² = 1225 + 900 + 625 + 64 + 4 = 2818