You are the manager in a market composed of 12 firms, each of which has a 8.33 percent market share. In addition, each firm ha strong financial position and is located within a 100-mile radius of its competitors. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market. b. Suppose that any two of these firms merge. What is the postmerger HHI? c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms? O It may but will also consider other factors
You are the manager in a market composed of 12 firms, each of which has a 8.33 percent market share. In addition, each firm ha strong financial position and is located within a 100-mile radius of its competitors. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market. b. Suppose that any two of these firms merge. What is the postmerger HHI? c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms? O It may but will also consider other factors
Chapter9: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 11SQP
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