An industry is composed of Firm 1, which controls 70 percent of the market, Firm 2 with 15 percent of the market, and Firm 3 with 5 percent of the market. About 20 frims of approximately equal size divide the remaining 10 percent of the market. Calculate the Herfindahl-Hirschman Index before and after the merger of Firm 2 and Firm 3 (assume that the combined market share after the merger is 20 percent). Would you view a merger of Firm 2 with Firm 3 as procompetitive or anticompetitive? Explain.© BrainMass Inc. brainmass.com December 20, 2018, 4:51 am ad1c9bdddf
Herfindahl-Hirschman index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the ...
Herfindahl-Hirschman index (HHI) is defined.