Herfindahl indices and concentration a) Consider an industry with 12 firms. One firm has a...
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Herfindahl indices and concentration a) Consider an industry with 12 firms. One firm has a market share of 30%. One firm ha a market share of 10%. One firm has a market share of 15%. The other nine (small firms) have shares of 5%. What is the HHI of this industry? b) Suppose that two of the small firms were to merge and that the post-merger market shares of all the other firms remained the same after the merger. What is the increase in HHI from this merger? Would the merger be presumed to be anticompetitive given the Horizonal Merger Guidelines? c) Suppose instead that one of the small firms has a strategy in which it acquires small firms, one after another. How many small firms can it absorb, before reaching the threshold where the next acquisition is presumed to be anticompetitive under the Guidelines
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