The following table shows the market shares during the first three months of 2017 for companies...

50.1K

Verified Solution

Question

Economics

The following table shows the market shares during the firstthree months of 2017 for companies in the US personal computer (PC)market:
Company
Market Share
Lenovo
20%
Hewlett-Packard
20%
Dell
15%
ASUS
7%
Apple
7%
ACER
6%
Others
25%
Treating â€œOthersâ€ as a single firm, how would the â€œAgenciesâ€characterize the concentration level in this market? How does youranswer change if â€œOthersâ€ consists of 5 firms each with 5% marketshare? Explain/Show Work. USE HHI
Treating â€œOthersâ€ as a single firm, predict whether theagencies would challenge a merger between Dell and Apple. How doesyour answer change (if at all) if you treat â€œOthersâ€ as 5 firmseach with 5% market share? Explain/Show Work.USE HHI
This time, suppose Lenovo and Hewlett-Packard were to merge.Treating â€œOthersâ€ as a single firm, would this merger likely beblocked? If so, is it presumptively illegal? Does your answerchange if you treat â€œOthersâ€ as 5 firms each with 5% market share?Explain/Show Work. USE HHI

Answer & Explanation Solved by verified expert

4.2 Ratings (727 Votes)

The Herfindahl Hirschman Index HHI is a common measure of level of concentration in the market sector This shows if the market is leaning towards few powerful players or many equal players Mathematically it is calculated by summing up the squares of market share percentages To much concentration of power may lead to monopolies and loss in consumer welfare The Justice Department in US uses HHI to scrutinise mergers It segments markets broadly into 3 types i 0 1500 Low concentration ii 1500 2500 Moderate Concentration iii 2500 10000 High Concentration In general if mergers increase HHI by 100 200 they are scrutinised See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Company	Market Share
Lenovo	20%
Hewlett-Packard	20%
Dell	15%
ASUS	7%
Apple	7%
ACER	6%
Others	25%