Suppose two of the three firms wished to do a merger, and become one giant firm. If you were in the role of Anti-Trust regulator, state one potential downside and one potential upside of the merger, and if on balance, you would you favor allowing or blocking this merger? (you may pick a real world industry to use as an example)

Suppose two of the three firms wished to do a merger, and become one giant firm. If you were in the role of Anti-Trust regulator, state one potential downside and one potential upside of the merger, and if on balance, you would you favor allowing or blocking this merger? (you may pick a real world industry to use as an example)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the Federal Trade Commission, “Many mergers benefit competition and consumers by allowing firms to operate more efficiently. But some mergers change market dynamics in ways that can lead to higher prices, fewer or lower-quality goods or services, or less innovation.” Antitrust laws often allow the former pro-competitive types of mergers, but prohibit the latter anti-competitive types. Suppose that one looks over the historical record of antitrust enforcement and finds that while the authorities have permitted some mergers and blocked others, the industry’s average price has tended to fall whenever a merger has been permitted and occurred. a) Based solely on the information provided above, is it correct then to infer that the antitrust authorities should have been more lenient and permitted more mergers? Why or why not? b) Based solely on the information in the question, is it likely that these merged firms sell products that are substitutes or complements? Why
7. Based only on the knowledge that the premerger market share of two firms proposing to merge was 20 percent each, an economist working for the Justice Department was able to determine that, if approved, the postmerger HHI would increase by 800. How was the economist able to draw this conclusion without knowledge of the other firms' market shares? From this information, can you devise a general rule explaining how the Herfindahl-Hirschman index is affected when exactly two firms in the market merge? (Hint: Compare a + with (a + b)².)
Suppose that the most popular car dealer in your area sells 2 percent of all vehicles. Instructions: Enter your answers as a whole number. a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? b. In that same situation, what would the four-firm concentration ratio be? percent
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I was hoping I could have some help on parts c-e of this problem I’m getting a little stuck on making sure my values are correct given this this is a cournot duopoly model.
16-1. Two equal sized newspaper have an overlap in circulation of 10% (10% of the subscribers subscribe to both newspaper). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both , because they’re are unwilling to pay twice to reach the same subscribers. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach an agreement with the other newspaper so the gains to reaching agreement are only $9? Suppose the two newspaper merge. What is the likely post merger bargaining outcome?
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