Suppose an industry has 100 firms and each firm has 1 of the

Suppose an industry has 100 firms and each firm has 1% of the market share, what is the HHL index for this industry? Your answer What is the largest possible number for HHL index? Your answer What is the HHI for the cellular wireless industry? (use the following stat: https://www.statista.com/statistics/199359/market-share-of-wireless- carriers-in-the-us-by-subscriptions/). Your answer

Solution

100 firms each have 1% market share, therefore the HHI= 1^2+1^2...........+1^2 where n=100.

So HHI=100.

If one single firm with 100% market share HHI will be 10000 which is the largest possible number for HHI index.

The cellular wireless industry is highly concentrated that is a large number of market shares are in few firms. According To US HHI of cellular wireless industry increased from 2744 to 3320.