Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 15

The four-firm concentration ratios for industries X and Y are 81 percent and 74 percent, respectively, while the corresponding Herfindahl-Hirschman indexes are 3,100 and 1,600. The Dansby-Willig performance index for industry X is 0.7, while that for industry Y is 0.55. Based on this information, which would lead to the greater increase in social welfare: A slight increase in industry X's output, or a slight increase in industry Y's output?