Consider Two Industries, Industry W and Industry X

question 171

Essay

Consider two industries, industry W and industry X.In industry W there are five companies, each with a market share of 20% of total sales.In industry X, there are six companies.One company has a 50% market share and each of the other five firms has a market share of 10%.
a.Calculate the four-firm concentration ratio for each industry.
b.Calculate the Herfindahl-Hirschman Index (HHI)for each industry.
c.What do the values of the two concentration measures imply about the degree of market power in the two industries?

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Definitions:

Water Purification

The process of removing undesirable chemicals, biological contaminants, and suspended solids from contaminated water to make it safe for human consumption.

Living Conditions

The circumstances or factors affecting the way in which people live, including their housing, health, and ability to meet basic needs.

Social Entrepreneurship

The practice of creating businesses with the primary goal of achieving social impact rather than maximizing profits alone.

Multiple Sources

Relying on or referring to more than one origin or point of information.