Consider the Following market for Widgets for question #1 and #2: Company Market

Question

Consider the Following market for Widgets for question #1 and #2:

Company                               Market Share
Widget Kings                                     35%                
Widget Brothers                                20%                
ABC Widgets                                     20%                
Discount Widgets                              15%                
Widget Warehouse                           5%                  
Widgets Widgets Widgets                5%                  

1. What is the Four Firm Concentration Ratio of this industry?
2. What is the HHI of this industry?

Explanation / Answer

1> Four firm concentration ratio would be (35+20+20+15)%=90%

2> HHI of this industry will be 35^2+20^2+20^2+15^2+5^2+5^2=2300

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