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Industrial Organisation 2022

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Question:

What is better, HH index or CR index for measuring market concentration?

Author: Hjalmer Pedersen



Answer:

HH index is considered the most accurate as it takes all firms into account. The CR index only considers the largest firms. CR is more easy to calculate and require less data through. Hence, HH index and CR index is a trade-off of accuracy and how easy it is to calculate.


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