Outline Hannah and Kay’s (1977) general criteria for a concentration measure to reflect the most important...

Outline Hannah and Kay’s (1977) general criteria for a concentration measure to reflect the most important characteristics of the firm size distribution. ( 20 marks)

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The importance characteristics of the firm size distribution-

The n firm concentration ratio - the CRn firm mainly focuses on the large firm rather than the small firms .Even the CRn method fails to meet many criteria of Hannah and kay for example merger between the two series or data will not allow the CRn to increase
Another important characteristics is aggregate concentration is imperative in nature
It also reveals the Economic importance of those diversified firms Which is reflected through industry concentration measures
In the HH index method offers greater discrimination in comparison to Crn method as it includes all the firm and industry keeping in mind the market share
The hannah and kay index gives importance to weight including both larger and smaller firms keeping in mind the varying proportion of both
It also decrease the degree of inaccuracy when the data is estimated for smaller firms
It can also be reffered as invesrse concentration method which is referred to number of equivalent

Rahul Sunny answered 1 year ago

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