Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 14PAA
a
To determine
To know:Whether merger of A and E comes under Horizontal merger guidelines.
b)
To determine
To ascertain:Whether merger of PM and MB comes under Horizontal merger guidelines.
c)
To determine
To know:Whether merger of LM and USS comes under Horizontal merger guidelines.
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Students have asked these similar questions
Nationwide 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?
Assume the following facts concerning the
horizontal merger model developed by Oliver
Williamson. Assume that demand is
P=120-2QP=120-2Q, where P and Q refer to price
and output, respectively. The post-merger market
structure is a monopoly. The pre-merger total cost
function is TC = 50Q and the post merger total
cost function is TC = 40Q.
a. Based on this information, determine the value
of the efficiency gains due to the merger. b. Based
on this information, determine the value of the
deadweight loss due to the merger.
c. Should the Department of Justice accept or
deny the merger?
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.
Chapter 7 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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Similar questions
- An 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 (C4). c. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of $300,000 and $250,000? Explain.arrow_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_forwardUber is one of the giant corporations and its mobile app allows consumers to arrange transportation using a smartphone Uber is currently operating in more than 60 countries thanks to the new technology and the fluidity of mobile connectivity Uber technologies collects customers requests and routes them nearby drivers who can serve them a smartphone is thereby an essential component of a drivers operational tools Uber technologies Inc emerged in 2009 as the dominant player in the ride sharing industry since it has been omnipresent and immerse Uber competes with several similar services Justify the type of market structure that Uber operates in and evaluate the likelihood of Uber making an economic profit in the long runarrow_forward
- Answer the following questions based on the information given in the article below. MXCC to Probe Grab-Uber Merger By Sulhi Azman, The Edge Markets, July 13,2018 KUALA LUMPUR (July 13): The Malaysia Competition Commission (MyCC) will investigate the merger between Uber and Grab in Malaysia, which has resulted in Grab having a monopoly in the country's ride-hailing business. "MyCC has taken preliminary action and conducted its first discussion with Uber and Grab on March 30, 2018, which was four days after the two companies announced their merger position," the Domestic Trade and Consumerism Ministry said in a statement today. Under the Competition Act 2010, the ministry said MyCC is empowered to take on parties which have merged and thus having resulted in a monopoly status within the market it operates at. At the same time, the ministry said MyCC is empowered to investigate and take action on parties abusing the monopoly status and violating Section 2 of the Competition Act 2010,…arrow_forwardDetermine whether each of the statements regarding the regulation of mergers in the United States is true or false by dragging the true and false labels into the correct bins The Department of Justice and the Federal Trade Commission are Answer Bank responsible for approving mergers and enforcing antitrust law false true Market definition is one of the main parts of current merger guidelines. The Federal Reserve oversees the enforcement of antitrust law Measure of concentration is one of the main parts of current merger guidelines. Mergers that result in a relatively high HHI are less likely to be approved than mergers resulting in a lower HHI. Firm diversification is one of the main parts of the current merger guidelinesarrow_forwardBased on United States Census Bureau data for 2017, for the utilities (electricity and gas) industry the four firm concentration ratio (C4) is 16.2 percent and the Herfindahl-Hirschman index is 161.4. Why might the actual concentration, and therefore market power enjoyed by a specific utility company in a state, be greater than what is indicated by these numbers? These ratios are calculated for the entire country, and not for a specific city or state. Please give an explanation.arrow_forward
- Categorize each of the following examples as a horizontal, vertical, or conglomerate merger.arrow_forwardBased on United States Census Bureau data for 2017, for the utilities (electricity & gas) industry the four firm concentration ratio (C4) is 16.2 percent and the Herfindahl-Hirschman index is 161.4. Why might the actual concentration, and therefore market power enjoyed by a specific utility company in a state, be greater than what is indicated by these numbers? These ratios are calculated for the entire country, and not for a specific city or state. Explain & show work.arrow_forwardHow do intellectual property rights drive innovation? Group of answer choices They allow companies to earn monopoly profits on its product for a period of time. They allow firms to earn oligopoly profits on their product for 10 years. They allow firms to innovate with much less debt. They provide a means for innovators to share their new inventions with their competitors.arrow_forward
- Which of the following would be most likely to contribute to the breakdown of a cartel in a natural resource (e.g., bauxite) market? Group of answer choices high prices low price elasticity of demand high compatibility of member interests unequal member ownership of the natural resourcearrow_forwardBased on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist. b. you compete against one other firm in a Cournot oligopoly. c. you compete against 19 other firms in a Cournot oligopoly.arrow_forwardIn practice, true monopolies are hard to find in the modern American economy, partly because of legal obstacles and partly because of answer choices Group of a) merger dominance b) antitrust laws c) government bureaucracy d) oligopolistic practicesarrow_forward
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