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Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329

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BuyFindarrow_forward

Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329
Chapter 15, Problem 10P
Textbook Problem
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Why would someone consider how broadly or narrowly the relevant market is considered to be so critical to the results when HHI values are used to evaluate mergers?

To determine

To explain:

The reason behind considering the relevant marketso criticallyfor results on using while using HHI values to assess the mergers.

Explanation of Solution

As the HHI is used for determining the competition in the industry, the department has provided a range to calculate the competition in the market on its basis, which is:

Range between 0-1500 is very competitive,

Range between 1500-2500 is somewhat competitive and

Range over 2,500 is perfectly competitive.

The range is calculated by considering the size and distribution of firms in market...

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