The following table provides hypothetical sales data for 10 firms that make up t

Question

The following table provides hypothetical sales data for 10 firms that make up the wind turbine industry Ignoring the fact that these companies are from different countries, a, calculate the four-firm concentration ratio and b. the Herfindahl-Hirschman index (for the 10 firms) from this data. (Don't forget the H index is a %.) Show vour work Does this industry seem to be very concentrated at the international level? Explain. Sales millions of $ 36 Brand Nordex Ming Yang United Power 48 Gamesa GE Sulzon Group20 Siemens Enercon Goldwind Vestas 26 16 24 32 15 13

Explanation / Answer

1. four-firm concentration ratio = sales of top four combined firms / total sales = (48+36+32+26)/(36+22+48+26+16+20+24+32+15+13) =56.35%

2. HHI = 1166.86

Market share =sales of each firm/total sales

3. yes, the industry seems to international concentrate as the four-firm concentration ratio is more than 50%

brand sales market share square of market share Nordex 36 14.29% 204.08% mingyang 22 8.73% 76.22% unite power 48 19.05% 362.81% gamesa 26 10.32% 106.45% ge 16 6.35% 40.31% sulzon group 20 7.94% 62.99% siemens 24 9.52% 90.70% enercon 32 12.70% 161.25% goldwind 15 5.95% 35.43% vestas 13 5.16% 26.61% total 252 1166.86%

Market share =sales of each firm/total sales

3. yes, the industry seems to international concentrate as the four-firm concentration ratio is more than 50%

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