MICROECONOMICS ASSIGNMENT

Submitted By:
Akash Jain (83)
Aman Agarwal (85)
Pratik Shiraokar
Pulina Kakkar (131)
Sourav Jena

Herfindalh-Hirschman Index- HHI

The Herfindahl-Hirschman index (HHI) is a commonly accepted measure of market concentration. It is
calculated by squaring the market share of each firm competing in a market, and then summing the
resulting numbers. The HHI number can range from close to zero to 10,000. The HHI is expressed as:
HHI = s1^2 + s2^2 + s3^2 + ... + sn^2 (where sn is the market share of the ith firm).
The closer a market is to being a monopoly, the higher the market's concentration (and the lower its
competition). If, for example, there were only one firm in an industry, that firm would have 100% market
share, and the HHI would equal 10,000 (100^2), indicating a monopoly. Or, if there were thousands of
firms competing, each would have nearly 0% market share, and the HHI would be close to zero,
indicating nearly perfect competition.
The U.S. Department of Justice uses the HHI for evaluating mergers. As a general rule, mergers that
increase the HHI by more than 100 points in concentrated markets raise antitrust concerns.
Market with a result of: less than 1,000 - Competitive Marketplace
Market with a result of: 1,000-1,800
- Moderately Concentrated Marketplace
Market with a result of: 1,800 or greater - Highly Concentrated Marketplace.
Hence we have a Highly Concentrated Marketplace with an HHI of 2820.499. So we can state that the
Passenger Vehicle Industry is an Oligopoly.

Company
Maruti Suzuki India Ltd.
Hyundai Motor India Ltd.
Honda Cars India Ltd.
Nissan Motor India Pvt. Ltd.
Volkswagen India Pvt.
Ltd.
Tata Motors Ltd.
Toyota Kirloskar Motor Pvt.
Ltd.
Ford India Pvt. Ltd.
Renault India Pvt. Ltd.
General Motors India Pvt.
Ltd.

2015-16 2015(%)
16(Volume)
46.63
11,74,912
22.38
5,63,760
7.55
1,90,273
5.28
1,33,032

S^2
2174.3569
500.8644
57.0025
27.8784

4.63
4.43

1,16,576
1,11,491

21.4369
19.6249

2.95
2.52
1.8

74,420
63,599
45,328

8.7025
6.3504
3.24

0.7

17,750

0.49

0.64

16,050

0.4096

0.35
0.14

8,787
3,466

0.1225
0.0196

Skoda Auto India Pvt.

Ltd.
Fiat India Automobiles Pvt.
Ltd.
Mahindra & Mahindra Ltd.

Company-wise Exports of Passenger cars % share : 1997-98

to 2015-16
2013- 2014- 2015Company
14
15
16
Hyundai Motor India Ltd.
42.32 35.27 26.84
Maruti Suzuki India Ltd.
18.11 20.22 21.45
Nissan Motor India Pvt. Ltd.
21.06 22.18 20.95
Volkswagen India Pvt. Ltd.
6.05 11.99 14.28
General Motors India Pvt. Ltd.
0
0.4
6.97
Ford India Pvt. Ltd.
5.55
4.87
5.17
Toyota Kirloskar Motor Pvt.
Ltd.
4.95
3.25
2.77
Honda Cars India Ltd.
0.92
1.35
0.93
Tata Motors Ltd.
1.04
0.46
0.61
Fiat India Automobiles Pvt.
Ltd.
0.01
0.01
0.02
Renault India Pvt. Ltd.
0
0
0.01
Mahindra & Mahindra Ltd.
0
0
0

Income Effect on Demand

Years

Per Capita
Income

2015-16

93293

2014-15

86879

2013-14

80388

2012-13

71,593

%Change in %Change
Income
Sales
Demand
in Income
Elasticity
27,89,67 0.07244325 0.0738268 0.9812593
8
4
2
5
26,01,23 0.03903600 0.0807458 0.4834427
6
9
8
2
25,03,50
- 0.1228472
9 0.06060229
1 0.4933143
26,65,01 0.01337572 0.1131444 0.1182180
5
4
7
9

2011-12

64316

26,29,83
9

Concentration and headings from projects (telecom)

Barriers to entry