HHI 1000 or 0.1

CFA Level II
#1

if HHI is more than 1800, it is controled by few companies, if we remove the percentage, does it mean if HHI>0.18, industry is controled by few. if HHI=0.15, does it mean we have SQRT(1/0.15 )=2 equal size companies?

#2

why sqrt? 1/HHI = 1/0.15 ~~ 7 companies…

#3

thanks, if HHI>0.18, does every change of 0.0015, government will intervene? because HHI=square of market share, you need squart. if your answer is 7 equal size companies, then what’s the size?

#4

linping85 Wrote: ------------------------------------------------------- > thanks, if HHI>0.18, does every change of 0.0015, > government will intervene? > because HHI=square of market share, you need > squart. > > if your answer is 7 equal size companies, then > what’s the size? I though govt will interfere with every change of 0.005, since the market is highly concentrated by one or few companies.