Question

Five brands are competing in the market.

• Company A has 35,000 units sold at $5.00/unit. It sold to 7,000 households in market size of 84,000.
• Company B has 12,000 units sold and revenues of $54,000 for these units. It sold to 3,000 households in market size of 21,000.
• Company C has 14,000 units sold at $5.50/unit. The average household purchase was 2 units. Its market size of 105,000.
• Company D has 5,000 units sold at $6.00/unit. It sold to 833 households in market size of 5,000.
• Company E has 22,000 units sold and revenues of $126,500 for these units. It sold to 5,500 households in market size of 22,000.

What is the Herfindahl unit index score value?

Answer 1

Calculation of marlet share of each company :-

A = 84000/237000 = 35%

B = 21000/237000 = 9%

C= 105000/237000 = 44%

D= 5000/237000 = 2%

E = 22000/237000 = 10%

Herfindahl unit index score value= (35)²+ (9)² + (44)² + (2)² + (10)²

^{= 1225+81+1936+4+100 = 3346}