Herfindahl Concentration with an Import Fringe and with Supply Constraints

Herfindahl Concentration with an Import Fringe and with Supply Constraints The widely used Herfindahl index of concentration measures market power incorrectly in cases where a core of sellers faces a competitive fringe or where some subset of sellers is supply-constrained. These cases arise, for example, where domestic sellers face a small fringe of imports, or where import supply of any magnitude is limited by natural or artificial constraints. Returning to the theoretical roots of the Herindahl, this paper demonstrates how the index should be modified to deal with such circumstances. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Herfindahl Concentration with an Import Fringe and with Supply Constraints

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1998 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007760704273
Publisher site
See Article on Publisher Site

Abstract

The widely used Herfindahl index of concentration measures market power incorrectly in cases where a core of sellers faces a competitive fringe or where some subset of sellers is supply-constrained. These cases arise, for example, where domestic sellers face a small fringe of imports, or where import supply of any magnitude is limited by natural or artificial constraints. Returning to the theoretical roots of the Herindahl, this paper demonstrates how the index should be modified to deal with such circumstances.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 6, 2004

References

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