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Industry Concentration & The Hannah-Kay Axioms: A Simulation Exercise

Contact: Dr. Paul L. Latreille
School of Business and Economics, Swansea University
Published online April 2011

The resources here are designed to allow students to explore various measures of industrial concentration and their behaviour under different scenarios, and hence to illustrate their performance in relation to, and the principles involved in, Hannah and Kay's (1977) 'axiomatic' properties characterising 'good' concentration measures. There are three files made available as follows:

  • Excel simulation spreadsheet calculating several measures of industrial concentration, plus concentration and Lorenz curves for user-supplied market share/sales values (you must enable macros for this spreadsheet to work);
  • User guide explaining how to get started with the above (including enabling macros);
  • Exercise sheet guiding students through a set of simulations exploring the behaviour of various of the measures and in relation to Hannah-Kay's axioms.

The resources should be self-explanatory to use, although it is strongly
recommended that the two-page user guide be read prior to opening the spreadsheet.

A fuller description of the resources and their use to support student learning , as well as the underlying pedagogical rationale is described in a forthcoming paper by Latreille and Mackley in the International Review of Economics Education incorporating Computers in Higher Education Economics Review.

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