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Problem 28

What would be evidence of serious competition bet…

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Problem 27

Does either the four-firm concentration ratio or the HHI directly measure the amount of competition in an industry? Why or why not?

Answer

Antitrust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.
The four-firm concentration ratio helps know the market dominance of top firms in the industry by
adding up the market share of top four market share holding firms in the industry. Herfindahl-
Hirschman index HHl is one of the measures of market share of dominant firms in an industry. HHI is calculated by squaring the market share of top firms and then adding them together. Now
both these indexes not exactly measures competitiveness, they just provide an idea about the
level of competitiveness in the industry because the competitiveness depends on multiple
factors.


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Video Transcript

so does off four firm ratio or the A Tree chai index measure. Competition specifically directly in against that will be no. It's not a direct measurement of competition, and the reason for that is the competition has many factors, some of which we might not be able to calculate perfectly. But these measurements serve as proxies They give us an idea of our competitive market might be, but it is far from being a direct measurement.

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