(a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?

(a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

You are a manager in a market composed of eight firms, each of which has a 12.5% market share. The premerger Herfindahl-Hirschman index (HHI) for this market equals If any two of these firms merge, the post-merger HHI equals Based on this information and the Horizontal Merger Guidelines described in this course, which of the following statements is true? A. A merger like this leads to an unconcentrated market and is typically permitted. B. A merger like this leads to a moderately concentrated market and potentially raises antitrust concerns. C. A merger like this leads to a highly concentrated market and potentially raises antitrust concerns. D. A merger like this leads to a highly concentrated market, is presumed to enhance market power, and will almost certainly be blocked. E. Other/None of the above/Not enough information provided. O
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Explain all option compulsary......you will not explain all option then I will give you down upvote...
With millions of passengers selecting air travel to reach their intended destinations, CaribbeanInternational Airlines has cornered the market by providing competitive fares, consistent customerservice and excellent returns for investors. The Chief Executive Officer has stated that thecompany wants to ensure that Caribbean nationals in the diaspora have easy and affordable accessto an airline with exceptional customer service. This airline caters to middle to high income earnerswho like to travel for adventure or relaxation. Priding itself as an affordable carrier with bargainfares, its mission is “Making air travel hassle free, reliable, economical and comfortable, we striveto transport our passengers safely to their chosen destinations.” The company has employees frommainly the Caribbean and North America who understand the needs and demands of their clientele.The company intends to expand travel services from various Caribbean destinations and Miami toother locations like New York,…
Rayz, Inc., competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered this industry and, as a consequence, Rayz is earning a return on investment that roughly equals the interest rate. Furthermore, the four-firm concentration ratio and the Herfindahl-Hirschman index are both quite small, but the Rothschild index is significantly greater than zero. Based on this information, which market structure best characterizes the industry in which Rayz competes? Explain
3. We consider the following situation between 2 firms. Firm A (the "acquirer") would like to take over firm T (the "target"). It does not know firm I's value; it believes that this value, when firm T is controlled by its own management, is at least $0 and at most $100, and assigns equal probability to each of the dollar values in this range (we assume that the value is distributed uniformly on this interval). Firm T will be worth 50% more under firm A's management than it is under its own management. Suppose that firm A bids p to take over firm 7; and firm T is worth x (under its own management). Then if T accepts A's offer, A's payoff is 2x-p and T's payoff is p; if T rejects A's offer, A's payoff is 0 and T's payoff is x. (a) Formalize this situation as a Bayesian Game (b) Find the Bayesian Nash Equilibria of this game.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Q2) Is it possible for a firm in an oligopolistic market to make a product differentiation. If yes, please explain by providing example. If not, please explain why it is not possible.
An automobile industry has 5 players (A, B, C, D, E) with 20%, 10%, 30%, 20%, 20% share respectively. What is the Herfindahl Hirschman Index (HHI)? Select one: a) 10000 b) 2200 c) 20 d) 2500 e) 100
What is the, HHI, Herfindahl-Hirschman Index for an industry where six companies each have a market share of 15% and one company which has a market share of 10%?
In the United States, Procter & Gamble have various laundry detergent brands such as Tide and Gain. The reason they have these different brands is because consumers are heterogeneous and not homogeneous. True False