Problem II. Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the sales of the banks in the area. Bank Name Urban Bank MegaBank Hometown Bank Bulk Bank Nationwide Bank Metropolitan Bank City Bank American Bank Atlantic Savings |Sales (in millions of US dollars) 540 1,500 660 1,065 1,245 880 1,350 710 1.185 1. Based on the information on the table above, calculate the four- firm concentration ratio and the Herfindahl-Hirschman index in the current market. 2. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Justice Department is likely to challenge the proposed merger? Explain your answer!

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Problem II.
Nationwide Bank has approached Hometown Bank with a proposal
to merge. The following table lists the sales of the banks in the area.
|Sales (in millions of US dollars)
Bank Name
Urban Bank
MegaBank
Hometown Bank
Bulk Bank
Nationwide Bank
Metropolitan Bank
City Bank
American Bank
Atlantic Savings
540
1,500
660
1,065
1,245
880
1,350
710
1,185
1. Based on the information on the table above, calculate the four-
firm concentration ratio and the Herfindahl-Hirschman index in the
current market.
2. Based on the FTC and DOJ Horizontal Merger
Guidelines described in the text, do you think the Justice
Department is likely to challenge the proposed merger? Explain
your answer!
Transcribed Image Text:Problem II. Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the sales of the banks in the area. |Sales (in millions of US dollars) Bank Name Urban Bank MegaBank Hometown Bank Bulk Bank Nationwide Bank Metropolitan Bank City Bank American Bank Atlantic Savings 540 1,500 660 1,065 1,245 880 1,350 710 1,185 1. Based on the information on the table above, calculate the four- firm concentration ratio and the Herfindahl-Hirschman index in the current market. 2. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Justice Department is likely to challenge the proposed merger? Explain your answer!
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