Managerial Economics & Business Strategy 7th Edition by Michael Baye, Stanley Brue, David MacPherson

Exercise 2

An industry consists of three firms with sales of $200,000, $500,000, and $400,000.
a. Calculate the Herfindahl-Hirschman indes (HHI).
b. Calculate the four-firm concentration ratio ( C 4 ).
c. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of $200,000 and $400,000 Explain.