mizztaylor1841 mizztaylor1841

26-08-2022
Social Studies

Answered

If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the herfindahl index could possibly take for car dealers in your area?

Answer :

vipinkumar69547 vipinkumar69547

22-09-2022

The largest value that the Herfindahl index could possibly take for car dealers in the area is-

Herfindahl index= 20 (number of firms) x 5² = 500

What is Herfindahl index?

The Herfindahl-Hirschman Index (HHI), a popular indicator of market concentration, is frequently used before to and after merger and acquisition (M&A) transactions to assess market competitiveness. When assessing market competition, one uses the Herfindahl-Hirschman Index (HHI).

An HHI of 1,500 or less indicates a competitive market, 1,500 to 2,500 indicates a moderately concentrated market, and 2,500 or more indicates a highly concentrated market.

The HHI's main drawback is that it is such a straightforward indicator that it neglects to account for the complexity of varied marketplaces.

A widely used indicator of market concentration is the Herfindahl-Hirschman Index (HHI). It is determined by squaring the market share of each company that is engaged in market competition and then adding the resulting figures. It can be anything between almost zero and 10,000.

Disclaimer- The complete question is

Suppose that the most popular car dealer in your area sells 5 percent of all vehicles

If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area

To know more about Herfindahl index refer:

https://brainly.com/question/28211756

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