Four firms control the market for a particular good, resulting in an HHI of 2,900. Total industry sales are $500, and it is known that two firms each have sales of $175. If each of the remaining two firms have the same sales, then we can conclude that the remaining two firms each have a market share of:
we got 0.15 how
$175 x 2 =$350 combined share of 2 companies
$500 - $350 =$150 combined share of other 2 companies.
$175 /$500 =35% share of one company
35% x 2 =70% share of 2 companies
$150/2 =$75 share of one of the remaining 2 companies
$75/$500 =15% percentage share of one of the remaining companies. So that:
15% x 2 =30% percentage share of the two remaining companies.
So that: 35%^2 + 35%^2 + 15%^2 + 15%^2 =0.29 HH Index.
