B.A measure called Herfindahl-Hirschman Index is used to measure the degree of competition in an industry. The HHI is the square of each firm's market share summed over the firms in the industry. (Where market share is the percentage of sales in the market accounted for by that firm). For example, if an industry contains only three firms and their market shares are 60%, 25%, and 15% then the HHI (by squaring each firm's share and summing them) is 4450. Some economists classify the market structures according to HHI scores. An HHI below 1,500 indicates astrongly competitive market, between 1,500 and 2,500 indicates a somewhat competitivemarket, and over 2,500 indicates an oligopoly. Given the information in the table, calculate the HHI in this industry. If yahoo and Bing were to merge, what would the HHI be?

B.A measure called Herfindahl-Hirschman Index is used to measure the degree of competition in an industry. The HHI is the square of each firm's market share summed over the firms in the industry. (Where market share is the percentage of sales in the market accounted for by that firm). For example, if an industry contains only three firms and their market shares are 60%, 25%, and 15% then the HHI (by squaring each firm's share and summing them) is 4450. Some economists classify the market structures according to HHI scores. An HHI below 1,500 indicates astrongly competitive market, between 1,500 and 2,500 indicates a somewhat competitivemarket, and over 2,500 indicates an oligopoly. Given the information in the table, calculate the HHI in this industry. If yahoo and Bing were to merge, what would the HHI be?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are the manager in a market composed of 12 firms, each of which has a 8.33 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market. b. Suppose that any two of these firms merge. What is the postmerger HHI? c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms? O It may but will also consider other factors O It likely will not O It likely will
QUESTION 7 Suppose two firms (X and Y) want to merge together. X currently controls 50.59% of the market, and Y currently controls 35.96% of the market. If X and Y merge, by how many points will the HHI increase? with X and Y separate) Hint this is the value of (HHI with X and Y merged) - (HHI Round your answers to two (2) decimal places if necessary
4) Which of the following companies is least likely to operate in an oligopoly? Burger King, which sells fast food Frontier, which provides Internet services AHF pharmacy Verizon, which provides cell phone coverage
In an oligopoly, the firm tha has the largest market share will also be the leader. True or False? Why?
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• The Chinese government has created a fund worth more than 20 trillion won to foster the semiconductor industry. Although there is a large technological difference between memory semiconductors, system semiconductors can be developed in a short period of time. The number of companies producing homogeneous quality products has increased. • Question (a) In the Cournot game, when the number of firms increases from 2 to n, compare the output, total output, and profit of each firm with N.E. in the Cournot model. • Question (b) If the number of companies participating in the semiconductor market increases to infinity, that is, in a perfectly competitive market, what will be the equilibrium point?
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25: What are the Characteristics of a Oligopoly Market? 26: What are the Characteristics of a Monopoly Market? 27: What are Intellectual Property Rights?
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