Suppose we have two markets, A and B, each consisting of seven firms. The market shares of the 5 largest firms (ordered by market share) are shown in the table below.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.9P
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Select the false statement.
Both CR3 and CR4 concentration measures point to the same market
(either A or B) having more market power.
○ The HHI of market A must be larger than the HHI of market B.
O The HHI of market B is less than 1,798 (in units of squared percent).
(Hint: for positive X and Y, (X + Y) 2 > X² + y²)
○ The 6th largest firm in market B captures less than 8 percent of the
market.
Transcribed Image Text:Select the false statement. Both CR3 and CR4 concentration measures point to the same market (either A or B) having more market power. ○ The HHI of market A must be larger than the HHI of market B. O The HHI of market B is less than 1,798 (in units of squared percent). (Hint: for positive X and Y, (X + Y) 2 > X² + y²) ○ The 6th largest firm in market B captures less than 8 percent of the market.
Suppose we have two markets, A and B, each consisting of seven
firms. The market shares of the 5 largest firms (ordered by market
share) are shown in the table below.
Firm rank Market share (%)
Market A Market B
1
20
22
2
20
20
3
20
20
4
20
15
5
15
15
6
?
?
7
?
?
Transcribed Image Text:Suppose we have two markets, A and B, each consisting of seven firms. The market shares of the 5 largest firms (ordered by market share) are shown in the table below. Firm rank Market share (%) Market A Market B 1 20 22 2 20 20 3 20 20 4 20 15 5 15 15 6 ? ? 7 ? ?
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