Based only on the knowledge that the premerger market share of two firms proposing to merge was 30 percent each, an economist working for the Justice Department was able to determine that, if approved, the postmerger HHI would increase by 1,800. How was the economist able to draw this conclusion with-out knowledge of the other firms’ market shares? From this information, can you devise a general rule explaining how the Herfindahl- Hirschman index is affected when exactly two firms in the market merge?
Answer to relevant QuestionsUse the estimated elasticities in Table 7– 4 to calculate the Rothschild index for each industry. Based on these calculations, which industry most closely resembles perfect competition? Which industry most closely ...A monopolist’s inverse demand function is P = 150 - 3Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC1 (Q1) = 6Q1, and the marginal cost of producing at facility 2 is MC2 ...The inverse demand for a homogeneous- product Stackelberg duopoly is P 16,000 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL and CF (QF) = 6,000QF. a. What is the follower’s ...PC Connection and CDW are two online retailers that compete in an Internet market for digital cameras. While the products they sell are similar, the firms attempt to differentiate themselves through their service policies. ...Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is 2. The marginal cost of producing the product is constant at $ 150, while average total cost at current ...
Post your question