Homework 3
Economics 118
Due 3/7/2005

1. Visit the Dept. of Justice’s (DOJ) web page on anti-trust. From there go to the page which discusses the Herfindahl-Hirschman index or HHI (http://www.usdoj.gov/atr/hhi.htm). According to this web page, how does the DOJ interpret the HHI index? (ie When are they likely to be alarmed about the level of concentration?)

2. Economists code industries by product. The SIC code (http://www.osha.gov/oshstats/sicser.html) is one example. Another code system is the NAICS (http://www.census.gov/epcd/www/naics.html)

a. What does SIC stand for?

b. What is the difference between the two, three and four digit codes? Provide an example.

c. What is the difference between the SIC and NAICS codes?

d. Which SIC and/or NAICS codes are relevant to your group paper?

3. a. Information on concentration within an industry is available at http://www.census.gov/epcd/www/concentration.html. Browse this web page and determine whether there is any relevant information for the industry your group is studying. Briefly report on what you find.

b. HHI estimates are available at: http://www.census.gov/mcd/historic/mc92cr.txt (You will also need the SIC information you found in the previous question.)

c. Based on the DOJ criteria discussed in question 1, identify how many firms are classified as ‘concentrated’ according to the DOJ’s interpretation of the HHI codes.

d. Which are the three most and least concentrated industries?

e. What is the concentration level of the industry you are studying for your group project? (if relevant)