The small upstate town of Geneva has 10 burger shops whose respective shares of the local hamburger
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Question:
The small upstate town of Geneva has 10 burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 22%, 20%, 14%, 12%, 10%, 8%, 5%, 4%, 3%, and 2%.
- Based upon your classification of the market structure of Geneva's hamburger industry, how would you predict that these companies will behave (compete):
- What kind of price competition might you observe from these firms?
- What kind of non-price competition might you observe from these firms?
- If the second and third largest hamburger shops merged to form a single firm, what would happen to the 4-firm concentration ratio? Recalculate the 4-firm concentration ratio.
- If the second and third largest hamburger shops merged to form a single firm, what would happen to the 8-firm concentration ratio? Recalculate the 8-firm concentration ratio.
- If the second and third largest hamburger shops merged to form a single firm, what would happen to the HHI? Recalculate the HHI.
- If you were a prosecutor in the Antitrust Division of New York State Attorney General's Office, would you ignore or prosecute said merger? Explain. [NOTE: Even though the proposed merger is intrastate rather than interstate, assume that the from the US Justice Department Guidelines are applicable. See pp 18-19.]
- What non-quantitative [qualitative] factors might you weigh in deciding to approve or reject the merger?
Related Book For
Microeconomics Principles, Problems and Policies
ISBN: 978-1259450242
20th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn
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