An industry has 25 firms all with identical market shares. Two of the firms then merge together. By how much does the Herfindahl index rise? (please do this without a calculator... for your own good)

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21-06-2022
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An industry has 25 firms all with identical market shares. Two of the firms then merge together. By how much does the Herfindahl index rise? (please do this without a calculator... for your own good)

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gauravsingh23VT gauravsingh23VT · Answer 1 · 2022-06-29T14:01:19+02:00

By 32 Herfindahl–Hirschman index rise, as an industry has 25 firms all with identical market shares. Two of the firms then merge together.

What is Herfindahl–Hirschman index rise?

The Herfindahl-Hirschman Index, a routinely used benchmark of ownership concentration, is abbreviated to as "HHI." The market share of each company active in price competition is squared before the resulting numbers are added to determine the HHI.

There are four option which is given below-

A) 8

B) 125

C) 32

D) 16

Thus, option C is correct.

For more details about Herfindahl-Hirschman Index, click here:

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