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Essay

Industry Concentration

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Issue:

Business

 

Written by:

Margaret M

 

Date added:

June 11, 2015

 

Level:

University

 

Grade:

C

 

No of pages / words:

2 / 490

 

Was viewed:

7748 times

 

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Essay content:

The other type of concentration measurement is known as the Herfindahl index and is calculated by squaring the individual producers percentage of the market and adding them together. For instance, if there were 5 firms in an industry and they each had 20% of the total output, the Herfindahl index would be; (20 squared) + (20 squared) + (20 squared) + (20 squared) + (20 squared)= 2000...
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An example of these concentration ratios, taken from the 1997 US government economic census, are as follows: 4-Firm Concentration Ratio Herfindahl Index Meat products: 35 393 Fruit and vegetable canning: 24 259 Breakfast cereal: 82 2,445 Women's and and misses' dresses: 13 76 Book printing: 32 364 Stationery: 56 1,128 Soap and detergent: 66 1,619 Men's footwear: 50 857 Women's footwear: 50 795 Bolts, nuts, rivets, washers: 9 40 Electronic computer: 45 728 Radio, TV, wireless broadcasting: 49 972 Burial caskets: 74 2,965 Generally, if the 4-firm concentration ratio is high, the Herfindahl index will be high as well...
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