PRINCIPLES OF MICROECONOMICS (OER)
PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
Publisher: OpenStax
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Chapter 11, Problem 1SCQ

Is it true that a merger between two films that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshmau Index? Explain briefly.

Expert Solution & Answer
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To determine

Whether it is true that a merger between two firms that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshman Index.

Answer to Problem 1SCQ

Yes, it is true that a merger between two firms that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshman Index.

Explanation of Solution

Since, the market shares of all the firms are included in the HHI calculation, so when there is a merger between the two firms the HHI will change.

So, in the case of four- firm concentration ratio it is possible that the merger between let’s say the 6th and the 5th largest firms in the market would create a new firm that may be ranked in the top four in the market.

So, in the case mentioned above a merger of the two firms that are neither in the top four, but still they would change the four-firm concentration ratio.

So, it is true that a merger between two firms that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshman Index.

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Is it true that a merger between two firms that are not already in the top four by size can affect both the four-firm concentration ratio and the Her findahl-Hirshman Index? Explain briefly.
Consider the firm Novo Nordisk and the production of Ozempic, a class of diabetes drugs which can additionally be used to treat weight-loss by mimicking GLP-1 to suppress appetite. At present, the firm has mostly a monopoly on this kind of injectable drug where semaglutide is the key active ingredient. For some context, read the following freely available articles: 1. https://theconversation.com/ozempic-the-miracle-drug-and-the-harmful-idea-of-a-future-without-fat-211661 2. https://fortune.com/europe/2024/03/28/ozempic-maker-novo-nordisk-facing-pressure-as-study-finds-1000-appetite-suppressant-can-be-made-for-just-5/ [or, access via Login to Curtin Library: https://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=bsu&AN=176267009&site=ehost-live&custid=s8423239] 3. https://www.usatoday.com/story/news/health/2024/03/29/ozempic-wegovy-weight-loss-diabetes-drug-cost/73125135007/ 4.…
what is the Four-firm concentration ratio (CR4)? what is the  Herfindahl-Hirshman Index (HHI)? and how are they different?

Chapter 11 Solutions

PRINCIPLES OF MICROECONOMICS (OER)

Ch. 11 - What is a corporate merger? What is an...Ch. 11 - What is the goal of antitrust policies?Ch. 11 - How do we measure a four-firm concentration ratio?...Ch. 11 - How do we measure a Herfindahl—Hirshman Index?...Ch. 11 - Why can it be difficult to decide what a market is...Ch. 11 - What is a minimum resale price maintenance...Ch. 11 - What is exclusive dealing? How might it reduce...Ch. 11 - What is a tie-in sale? How might it reduce...Ch. 11 - What is predatory pricing? How might it reduce...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - What is cost-plus regulation?Ch. 11 - What is price cap regulation?Ch. 11 - What is deregulation? Name some industries that...Ch. 11 - What is regulatory capture?Ch. 11 - Why does regulatory capture reduce the...Ch. 11 - Does either the four-firm concentration ratio or...Ch. 11 - What would be evidence of serious competition...Ch. 11 - Can you think of any examples of successful...Ch. 11 - If you were developing a product (like a web...Ch. 11 - In the middle of the twentieth century, major U.S....Ch. 11 - Why are urban areas willing to subsidize urban...Ch. 11 - Deregulation, like all changes in government...Ch. 11 - Do you think it is possible for government to...Ch. 11 - Use Table 11.5 to calculate the four-firm...Ch. 11 - Use Table 11.5 and Table 11.6 to calculate the...Ch. 11 - If the transit system were allowed to operate as...Ch. 11 - If the transit system were regulated to operate...Ch. 11 - If the transit system were regulated to provide...
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