Asked by Lainey Erdmann on Jun 13, 2024
Verified
The larger the Herfindahl index, the
A) less the degree of import competition in an industry.
B) greater the degree of import competition in an industry.
C) less the degree of market power in an industry.
D) greater the degree of market power in an industry.
Herfindahl Index
The Herfindahl Index is a measure of market concentration used to determine the intensity of competition within an industry, calculated by summing the squares of the market shares of all firms within the market.
Import Competition
The pressure on domestic companies from foreign producers offering goods or services in the same market.
- Acknowledge the restrictions of concentration ratios and the Herfindahl index in illustrating market fluctuations.
Verified Answer
SS
spicy sanduneJun 18, 2024
Final Answer :
D
Explanation :
The Herfindahl index is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. A larger Herfindahl index indicates a higher concentration of market power within fewer firms, suggesting less competition and greater market power for those firms.
Learning Objectives
- Acknowledge the restrictions of concentration ratios and the Herfindahl index in illustrating market fluctuations.