MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 6CACQ
To determine
To explain: The conditions under which Justice Department might approve merger.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
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 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?
What would the Herfindahl-Hirschman Index (HHI) be in each of the following situations?
1 firm with a monopoly in the market
According to the Justice Department guidelines, mergers in an industry are seldom challenged if the
industry
O
has a pre-merger HHI less than 1500
would have a post-merger Herfindahl-Hirschman Index (HHI) less than 1500
has a post-merger HHI of 10,000
would have a post-merger HHI greater than 2500
has a pre-merger HHI of less than 2500
Knowledge Booster
Similar questions
- Analyze Monopoly market structurearrow_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_forwardSuppose that the most popular car dealer in your area sells 10 percent of all vehicles. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? In that same situation, what would the four-firm concentration ratio be?arrow_forward
- Economists believe mergers can sometimes achieve greater efficiency than two companies that do not merge. true or falsearrow_forwardWhich 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.arrow_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
- 20) If the Herfindahl-Hirschman Index of an industry is less than 1,000, then the Antitrust Division of the Justice Department A) will challenge any merger that would increase the index by over 100 points. B) considers the industry unconcentrated. C) considers the industry already concentrated. D) will challenge any merger that raises the index by more than 50 points.arrow_forwardHow does the antitrust treatment of price discrimination, tying contracts, and exclusive dealing contracts in the European Union compare with their treatment in the United States?arrow_forwardCategorize each of the following examples as a horizontal, vertical, or conglomerate merger.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning