Question: 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
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?
Step by Step Solution
3.44 Rating (160 Votes )
There are 3 Steps involved in it
As shown in the text the HHI is When firms i and j merge ... View full answer
Get step-by-step solutions from verified subject matter experts
Document Format (1 attachment)
288-B-E-M-E (2704).docx
120 KBs Word File
