31. Know how to calculate the Herfindahl Index. What HHI number means a pure monopolist?What HHInumber means a purely competitive market?Above what number indicates an oligopoly?

Answered: - Know how to calculate the Herfindahl…

- Know how to calculate the Herfindahl Index. What HHI number means a pure monopolist? number means a purely competitive market? What HHI Above what number indicates an oligopoly?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

31. Know how to calculate the Herfindahl Index. What HHI number means a pure monopolist?
What HHI
number means a purely competitive market?
Above what number indicates an oligopoly?

Expert Solution

Step 1

in HHI we consider the percentage share of each firm in an industry)

HHI = s_1²₊ s_2² + s_3²+…..+ s_n²

where s_nthe market share percentage of firm n

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