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An industry is composed of Firm

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solution


Question

2. An industry is composed of Firm 1, which controls 70% of the market, Firm 2 with 15% of the market, and Firm 3 with 5% of the market. About 20 firms of approximately equal size divide the remaining 10% of the market. Calculate the Herfindahl-Hirschman Index before and after the merger is 20%). Would you view a merger of Firm 2 with Firm 3 as procompetitive or anticompetitive? Explain.

 

Paper#29719 | Written in 18-Jul-2015

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