Herfindahl-Hirschman Index o HHI is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers. H=∑S2 o HHI ranges from a minimum of close to 0 to a maximum of 10.000
Herfindahl-Hirschman Index HHI is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers. i HHI Si ＝ 2 HHI ranges from a minimum of close to 0 to a maximum of 10,000
Herfindahl-Hirschman Index oIfHHI<1,000, the industry is considered as competitive ◆If1,000≤HH≤1,800, the industry is considered as moderately concentrated ◆ IfHE≥1,800, the industry is considered as highly concentrated As a general rule, mergers that increase the HHI by more than 100 points in concentrated markets raise antitrust concerns
Herfindahl-Hirschman Index If HHI ＜ 1,000, the industry is considered as competitive. If 1,000 ≤ HHI ＜1,800, the industry is considered as moderately concentrated. If HHI ≥ 1,800, the industry is considered as highly concentrated. As a general rule, mergers that increase the HHI by more than 100 points in concentrated markets raise antitrust concerns
Herfindahl-Hirschman Index o If there were only one firm in an industry, that firm would have 100%o market share and the hhi would be equal to 10,000 (1002) If there were thousands of firms competing, each would have a nearly 0% market share and the hhi would be close to zero indicating nearly perfect competition
Herfindahl-Hirschman Index If there were only one firm in an industry, that firm would have 100% market share and the HHI would be equal to 10,000 (1002 ). If there were thousands of firms competing, each would have a nearly 0% market share and the HHI would be close to zero, indicating nearly perfect competition
Characteristics of an Oligopoly Market o Small number of suppliers Similar or identical products ◆ Barrier to entry .Interdependent firms
Characteristics of an Oligopoly Market Small number of suppliers Similar or identical products Barrier to entry Interdependent firms
Small Number of Suppliers O As small as they might cooperate or collude in such strategies as pricing. Examples: automobiles, steel, computers
Small Number of Suppliers As small as they might cooperate or collude in such strategies as pricing. Examples: automobiles, steel, computers