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Herfindahl index of market concentration One way of mcasuring market concentration is through the use of the Herfindahl index, which is defined as H=∑i=1^n si^2 where si=qi / Q is firm i 's market share. The higher is H, the more concentrated the industry is said to be. Intuitively, more concentrated markets arc thought to be less compctitive because dominant firms in concentrated markets face little competitive pressurc. We will assess the validity of this intuition using several models. a.
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