Instructions: Please answer all questions clearly and completely. If you use gra
ID: 1204265 • Letter: I
Question
Instructions: Please answer all questions clearly and completely. If you use graphs or tables in your answers, they must be clear enough that the graders can understand them (this means labeling axes, variables, and so forth). If a question requires you to make calculations, you must show your work.
(5 points) The following table shows the capacity ownership for an electricity market with ten firms. Calculate the HHI for this market. Please round your answer to the nearest whole number.
Firm
Capacity (MW)
A
62
B
35
C
25
D
91
E
123
F
140
G
23
H
31
I
77
J
89
Firm
Capacity (MW)
A
62
B
35
C
25
D
91
E
123
F
140
G
23
H
31
I
77
J
89
Explanation / Answer
Herfindahl-Hirschman Index - HHI' A commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. The HHI number can range from close to zero to 10,000.
Firm
Capacity (MW)
%Share
(%Share)²
A
62
8.908045977011493
79.35328312855066
B
35
5.028735632183908
25.28818205839609
C
25
3.5919540229885056
12.90213370326331
D
91
13.074712643678161
170.94811071475758
E
123
17.67241379310345
312.31420927467303
F
140
20.114942528735632
404.6109129343374
G
23
3.3045977011494254
10.920365966442068
H
31
4.454022988505747
19.838320782137664
I
77
11.063218390804598
122.3948011626371
J
89
12.78735632183908
163.5164817016779
TOTAL
698
1322.086801426873
Firm
Capacity (MW)
%Share
(%Share)²
A
62
8.908045977011493
79.35328312855066
B
35
5.028735632183908
25.28818205839609
C
25
3.5919540229885056
12.90213370326331
D
91
13.074712643678161
170.94811071475758
E
123
17.67241379310345
312.31420927467303
F
140
20.114942528735632
404.6109129343374
G
23
3.3045977011494254
10.920365966442068
H
31
4.454022988505747
19.838320782137664
I
77
11.063218390804598
122.3948011626371
J
89
12.78735632183908
163.5164817016779
TOTAL
698
1322.086801426873