Question

How is the concept of concentration in the United States affected by the presence of foreign firms (not foreign firms that have factories or offices in the United States, but foreign firms that produce in their home countries and then export to the United States and are not included in the measures of C4 and HHI). Do these foreign firms tend to increase or reduce the degree of concentration in U.S. industry? Please explain.

Answer 1

HHI and C4 are the indexes used for measuring an industry's market concentration.US which focuses on market concentration gets affected if foreign firms dumping is high and not included in the calculation. Foreign firms tries to acquire the market share of US by selling products at lower cost .
The foreign firms tend to increase the degree of concentration in U.S economy and industry. This is for capturing markets and to increase profitability. Thus they invest more in the U.S economy and produce affordable goods for consumers.
Market power is determined not only by size but also by the intensity of concentration,product characteristics and the regulations that favour the Industry.