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:

Vendor

A business or person that sells products or services to another entity, often within a supply chain.

Installed

The state of having been set up for use or operation, as in software being loaded onto a computer or a device being placed into its operational setting.

Recommendation Engine

A sophisticated algorithm used by websites and apps to suggest products, services, or content to users based on their preferences, behaviors, and historical data.

Mathematical Algorithms

Sequences of precise instructions or rules designed to perform a calculation, solve problems, or process data.