5. of the total market share. If firm 1 and firm 2 were to merge, calculate the pre- A market has 3 firms. Firm 1 has 37%, firm 2 has 17% and firm 3 has 46% merger and post-merger Hirschmann-Herfindahl Index in the market. If these 3 firms were based in the US, would this merger likely be challenged by the US Department of Justice? If these 3 firms were under the jurisdiction of the European Commission, what criteria could the European Commission use to argue that firm 1 and 2 should not be allowed to merge?

5. of the total market share. If firm 1 and firm 2 were to merge, calculate the pre- A market has 3 firms. Firm 1 has 37%, firm 2 has 17% and firm 3 has 46% merger and post-merger Hirschmann-Herfindahl Index in the market. If these 3 firms were based in the US, would this merger likely be challenged by the US Department of Justice? If these 3 firms were under the jurisdiction of the European Commission, what criteria could the European Commission use to argue that firm 1 and 2 should not be allowed to merge?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 1.1CE

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You are the manager in a market composed of eight firms, each of which has a 12.5 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors. 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?
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A few years ago, US antitrust officials faced the following case. Nestle, producers of Haagen-Dazs wanted to merger with Dreyers, another producer of what is called “superpremium” ice cream. Those opposing the merger pointed about the combined market share of Nestles and Dreyers would be 56% so that along with Unilever, producer of Breyers and Ben&Jerrys, three firms would sell 97% of this half-billion dollar market. Those in favor of the merger countered that the total supermarket ice cream sales are much greater, in excess of $1 billion because consumers can choose non-superpremium ice cream in which Nestle and Dreyer would command only 22% of the market and Unilver an additional 21%. What is the best way to measure the market for ice cream: superpremium or all supermarket ice cream? Should the merger have been allowed?