Problem
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?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.