Suppose that an industry consist of 6 firms. They are sorted with respect to their market share, s1 > s2 > s3 > s4 > s5 > s6.
1. Determine the concentration ratio of the 4 largest firms (CR4) and the Herfindal- Hirsmann index (HHI)
2. Assume that the firm's 6 and 5 merge. Does the merge affect CR4? And HHI?
3. Assume that firm six buys 70% of the business of firm 5. Explain does the partial purchase affect CR4? And HHI?