Final answer:
An HHI of 0 would indicate perfect competition in an industry, with a vast number of firms each holding negligible market shares. This is theoretically possible but highly unlikely in the real world. A low HHI generally suggests a competitive market.
Step-by-step explanation:
The Herfindahl-Hirschman Index (HHI) measures the level of competition in an industry by calculating the sum of the squares of the market shares of each firm within the industry. A Herfindahl-Hirschman Index of 0 indicates an industry with perfect competition, where there are many firms with very small market shares, to the point that no single firm has any significant market power. In reality, having a HHI of exactly 0 is virtually impossible, as this would imply an infinite number of firms in the market. Typically, a low HHI suggests a competitive marketplace, whereas a high HHI points to a concentrated market, possibly indicating oligopolistic or monopolistic conditions.