Question: The information below shows the percentage of total sales (market sales) for each firm in the health care industry:
| Firm |
Percentage
of sales |
| 1 |
35 |
| 2 |
10 |
| 3 |
25 |
| 4 |
3 |
| 5 |
4 |
| 6 |
18 |
| 7 |
2 |
| 8 |
3 |
a) what is the 4 firm concentration ratio; is the market concentrated?
b) If firm 1 and firm 6 where to merge, recalculate the concentration ratio. Is the market more or less concentrated?
c) using the initial data calculate the Herfindl-Hirschman Index (HHI). Is the market concentrate? Why?
d) If firm 2 and firm 3 merge, what is the new HHI? Would the department of justice challenge the merger? Why?