Industry has four firms with market shares of 40%, 30%, 20% and 10%.
“An alternative way to interpret the Herfindahl index is to view its reciprocal, 1/0.3=3.33 for the above example, as the equivalent number of equal sized firms in the industry.”
I don’t understand this. “the equivalent number of equal sized firms in the industry”? What do they mean?
Study together. Pass together.
Join the world's largest online community of CFA, CAIA and FRM candidates.