Hirschman-Herfindahl Index (HHI)
Not what you're looking for?
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 firms 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 and Firm 3 as procompetitive or anticompetitive? Explain.
Purchase this Solution
Solution Summary
Hirschman-Herfindahl Index (HHI) is examined.
Solution Preview
Please refer to the attachment as well.
Hirschman-Herfindahl Index (HHI). It is the sum of the squared market shares of the competitors. The index ranges from 10,000 for pure monopoly down to below 100 for perfect competition. The HHI before merge is computed by:
Hirschman-Herfindahl Index ...
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.