Answer to Question #92618 in Microeconomics for Anshika Kaushal

Question

At the mall, there are 20 identically sized shoe stores. What is the four-firm concentration ratio?
At the mall, there are 28 identically sized shoe stores. What is the Herfindhal index?

Answer 1

a)since the firms are identical,sales are identical so the four firm concentration ratio is

$$\frac{4}{20}\times100=20$$

b) each firm has a market share of

$$\frac{100}{28}=3.571$$

$$3.571\times3.571=12.75$$ $$28\times12.75=357$$

The Harfindhal concentration is 357