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HHI Index

Determine whether the Justice Department would challenge a merger between two firms in an industry with 10 equalized firms, based on the Herfindhal index guidelines. (No other factor considered)

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Percent share of each firm before merger=100%/10=10%
HHI Index=10^2+10^2+10^2+10^2+10^2+10^2+10^2+10^2++10^2+10^2=1000
HHI Index ...

Solution Summary

Solution determines whether the proposed merger in the given case is likely to be challenged.