Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 15, Problem 10P
To determine
To explain:
The reason behind considering the relevant marketso criticallyfor results on using while using HHI values to assess the mergers.
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Students have asked these similar questions
Which of the following would be most in line with how economists believe modern analysis of mergers should be done?
Group of answer choices
Mergers should never be allowed if the HHI (Herfindahl-Hirschman Index)increases by more than 300.
Regulators should use the most narrow definition of a market when evaluating mergers.
Regulators should us the most broad definition of the market when evaluating mergers.
Regulators should evaluate how the merger will change the way firms act and how this will impact consumers.
Economists believe mergers can sometimes achieve greater efficiency than two companies that do not merge. true or false
In view of the empirical evidence, what factors do you think might be responsible for the current trends of increasing size and mergers
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Similar questions
- An industry consists of three firms with sales of $285,000,$615,000 , and $310,000 . a. Calculate the Herfindahl-Hirschman index (HHI) . Instruction: Round to the nearest integer. b. Calculate the four-firm concentration ratio (C 4 ) . c. Based on the FTC and DOJ Horizontal Merger Guidellnes described in the text, is the Departmen of Justice likely to attempt to block a horizontal merger between two firms with sales of $285.000 and $310.000 ?arrow_forwardGovernment should regulate mergers between firm's give reason in favor and against this statementarrow_forwardHow would a graph between dominant firms,fringe firms and entire market look? where would profit maximizing quantities be?arrow_forward
- An industry consists of three firms with sales of $205.000, $745.000, and $305,000. a. Calculate the Herfindahl-Hirschman Index (HH). Instruction Enter your response rounded to the nearest integer 16.66 Calculate the four-firm concentration ratio (Ca Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, is the Department of Justice likely to attempt to block a horizontal merger between two firms with sales of $205,000 and $305,000? Yes O Noarrow_forwarda) What is a tie-in contract and how does that differ from bundle pricing? b) What is a conglomerate merger and why are they more likely to be approved? c) Limit pricing is a strategy where a firm sets a low, but profitable, price to discourage entry. How does that differ from predatory pricing?arrow_forwardAn industry consists of three firms with sales of $300,000, $700,000 and $250,000. a) Calculate the Herfindahl-Hirschman Index (HHI) b) Calculate the four-firm concentration ratio c) Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think that the Department of Justice would attempt to block a horizontal merger between two firms with sales of $300,000 and $250,000? Explain.arrow_forward
- Suppose an industry is composed of eight firms with the following market shares:A 30% E 8%B 25 F 5C 15 G 4D 10 H 3Based on the (revised 2010) merger guidelines, would the Antitrust Division likely challenge a proposed merger betweena. Firms C and D (assume the combined market share is 25 percent)?b. Firms F and G (assume the combined market share is 9 percent)? Explain your answer.arrow_forwardNationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the sales of the banks in the area. Use this information to calculate the four-firm concentration ratio and the Herfindahl-Hirschman index. Based on the FTC and DOJ Horizontal Merger Guidelines, do you think the Justice Department is likely to challenge the proposed merger?arrow_forwardConsider an industry consists of three firms (Firm-A, Firm-B and Firm-C) with sales of AED300,000, AED700,000, and AED250,000; respectively. Calculate the Herfindahl-Hirschman index (HHI) for the industry. Calculate the four-firm concentration ratio (C4). Do you think the ‘Department of Justice’ (see the guideline below) would attempt to block a horizontal merger between Firm-A and Firm-C)? The Department of Justice’s Guidelines (Suppose): Suppose that the Department of Justice’s Guidelines suggest that antitrust authorities are more likely to challenge a merger when the relevant Herfindahl-Hirschman index is greater than 2,500 and the resulting increase in the index as a result of the merger is more than 200.arrow_forward
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