Abstract

This paper aims to prove that the Herfindahl-Hirschman Index (HHI), which is widely used to describe the concentration of a given market, may not be a good competitiveness indicator as many authors assume when dealing with a mobile market. This paper shows that even if the HHI formula itself is not in doubt, but when used for a market which meets two basic criteria: it is regulated and has limited resources (the frequencies used to provide mobile service are not infinite, which implies the limitation on the number of firms in the segment), its result can be misleading. In a market segment, where the two previously mentioned conditions are met, the interpretation of an HHI output value is almost known in advance. According to the current interpretation of an HHI output value, no mobile market in the world is highly competitive, which elicits some questions.

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