Question: a) Suppose in the search engine market, Google has a market share of 67% Bing has a market share of 18%, Yahoo! 11%, Ask 3%

a) Suppose in the search engine market, Google has a market share of 67% Bing has a market share of 18%, Yahoo! 11%, Ask 3% and AOL 1%. Calculate the Herfindahl-Hirschman Index (HHI) for this industry.

b) Prior to the Trump Administration and according to standard Justice Department guidelines, in an industry with an HHI over 1.500. a merger that results in a significant increase in the HHI will receive special scrutiny and is likely to be disallowed. If Bing were to merge with Ask and the combined market share of Bing-Ask increases to 21% (assuming that the market shares of the other firms stay the same). What is the new HHI?

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