Explore BrainMass

Explore BrainMass

    Calculating HHI index and C4 Ratio

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    An industry consists of 6 firms, with sales of $100,000, $500,000, $400,000, $300,000, 60,000, and $75,000. Now, suppose the two smallest firms merge.

    a. Calculate the four-firm concentration ratio (C4) before the merger. Show your work.
    b. Calculate the four-firm concentration ratio (C4) after the merger. Show your work.
    c. Calculate the Herfindahl-Hirschman index (HHI) before the merger. Show your work.
    d. Calculate the Herfindahl-Hirschman index (HHI) after the merger. Show your work.
    e. Do you think the U.S. Department of Justice would try to block the merger?

    © BrainMass Inc. brainmass.com March 4, 2021, 10:53 pm ad1c9bdddf
    https://brainmass.com/economics/principles-of-mathematical-economics/calculating-hhi-index-and-c4-ratio-371685

    Solution Preview

    Please refer attached file for better clarity of tables.

    Pre Merger

    Firm Sales % Share
    1 100000 6.97%
    2 500000 34.84%
    3 400000 27.87%
    4 300000 20.91%
    5 60000 4.18%
    6 75000 5.23%

    Total 1435000

    After merger
    Firm Sales % Share
    1 100000 6.97%
    2 500000 34.84%
    3 ...

    Solution Summary

    Solution describes the steps to calculate HHI index and four-firm concentration ratio in the given case. It also checks whether given merger will be blocked by U.S. Department of Justice.

    $2.49

    ADVERTISEMENT