Complete the following problem :
The table represents the market share of the top eight firms in a hypothetical industry in 2006 and 2011.
- Calculate the four-firm concentration ratios for 2006 and 2011. Analyze the industry changes during this five-year period.
- Calculate the eight-firm concentration ratios for 2006 and 2011. Does this index give you any different indication about changes in the industry over the same period?
- Calculate the Herfindahl-Hirschman Indexes for 2006 and 2011. What information does this index tell you about changes in the industry? How does this information differ from the four-firm and eight-firm indexes?
- Hypothesize what you think might have happened to supply, demand, and price of products in this industry from 2006 to 2011. Use charts, if appropriate, to illustrate your response.
|
Firm
|
Market Share 2006
|
Market Share 2011
|
|
A
|
10%
|
32%
|
|
B
|
8%
|
5%
|
|
C
|
12%
|
12%
|
|
D
|
20%
|
29%
|
|
E
|
21%
|
9%
|
|
F
|
2%
|
1%
|
|
G
|
5%
|
4%
|
|
H
|
6%
|
2%
|