Tractor Supply, Corp. currently has a 50 percent market share in banking services, followed by Farm Equipment, Inc., with 30 percent and Plow Mart with 20 percent.
a. What is the concentration ratio as measured by the Herfindahl-Hirschman Index (HHI)?
b. If Tractor Supply, Corp. acquires Plow Mart, Inc., what will be the new HHI?
c. Assume the Justice department will allow mergers as long as the changes in HHI do not exceed 1,500. What is the minimum amount of assets that Tractor, Corp will have to divest after it merges with Plow Mart, Inc.?