1 Suppose the automobile market in the US is divided as foll

1.   Suppose the automobile market in the U.S. is divided as follows:

            General Motors                       28%

            Ford                                        23%

            Toyota                                     18%

            Daimler-Chrysler                     16%

            All others                                15%

a) What is the value of the four-firm concentration ratio?

b)   What is the approximate value of the Herfindahl-Hirschman Index?

Solution

a)

0.28

b)

0.28 + 0.23 + 0.18 + 0.16 +0.15

1