The ranking of industries by the four-firm concentration ratio usually, but not always, reveals the same pattern as ranking by HHI. When a discrepancy is found it is usually due to the following:
A. The two indices are designed to measure two different attributes of markets.
B. The four-firm concentration index contains data on only the largest four firms, while the HHI is based on data for all firms in the industry.
C. The HHI is based on squared market shares, while the four-firm concentration ratio is not.
D. The four-firm concentration index contains data on only the largest four firms, while the HHI is based on data for all firms in the industry and the HHI is based on squared market shares, while the four-firm concentration ratio is not.
Answer: D
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