true. one flaw with the HHI measure is that as n (the number of teams increases) the value of HHI decreases even if the league has not become more competitive.
What is HHI?
The Herfindahl-Hirschman Index, a widely used index of market concentration, is referred to as "HHI." The market share of each company that competes in the market is squared, and the resulting numbers are then added to determine the HHI. The Herfindahl index measures a company's size in relation to the industry it operates in and serves as a gauge of how fiercely it is competing with other businesses. A low level of concentration indicates that the market is more evenly distributed among several companies of roughly equal size, which is the ideal competitive condition. In general, increases in the Herfindahl index show less competition and more market dominance, whereas reductions show the opposite.
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