Suppose there are N=8 hospitals in the market, and each of them has an equal share of the market (1/8). What is the value of the Herfindahl-Hirschman Index in this hospital market? One of the hospitals gets a fancy new cardiac surgery facility, and takes market share from the other hospitals. Now its market share is 85%, and the other 7 hospitals split the remaining 15% of the market equally. What is the value of the HHI in this case? Are each of these markets competitive or concentrated?

Suppose there are N=8 hospitals in the market, and each of them has an equal share of the market (1/8). What is the value of the Herfindahl-Hirschman Index in this hospital market? One of the hospitals gets a fancy new cardiac surgery facility, and takes market share from the other hospitals. Now its market share is 85%, and the other 7 hospitals split the remaining 15% of the market equally. What is the value of the HHI in this case? Are each of these markets competitive or concentrated?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 10MC

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