Step 4. Note that the HHI gives greater weight to large firms.

Step 5. Consider the earlier example, comparing one industry where five firms each have 20% of the market with

an industry where one firm has 77% and the other 23 firms have 1% each. The two industries have the same
four-firm concentration ratio of 80. However, the HHI for the first industry is 5(202) = 2,000, while the HHI for the
second industry is much higher at 772 + 23(12) = 5,952.

Step 6. Note that the near-monopolist in the second industry drives up the HHI measure of industrial

concentration.

Step 7. Review Table 11.2 which gives some examples of the four-firm concentration ratio and the HHI in various

U.S. industries in 2016. (You can find market share data from multiple industry sources. Data in the table are

from: Statista.com (for wireless), The Wall Street Journal(for automobiles), Gartner.com (for computers) and the

U.S. Bureau of Transportation Statistics (for airlines).)

U.S. Industry
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