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Choose a good or service that is supplied by a small number of firms (e.g., automobiles)....

Choose a good or service that is supplied by a small number of firms (e.g., automobiles). Who are the leading firms and what are their market shares? Compute the concentration ratio and the HHI (show your work in your post).”

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Answer #1

The good and service of my choice is automobiles.

The USA automobile industry is dominated by the following six players (including % of market share):

General Motors - 17%

Ford - 14.8%

Toyota - 14%

Chrysler - 12.5%

Nissan - 10%

Honda - 8.9%

The HHi concentration ratio is calculated by taking the sum of squares of market shares of the leading firms in the industry. In this case, the HHI concentration ratio = (0.17)2 + (0.148)2 + (0.14)2 + (0.125)2 + (0.10)2 + (0.089)2 =

0.0289 + 0.021904 + 0.0196 + 0.015625 +0.01 +0.007921 = 0.10

Note: The market share percengatges have been converted into decimal before taking sqares.

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