Question

A market that has three firms with the following market shares: Firm A Firm B Firm C = 35% = 41% = 24% Suppose Firm B wants to acquire Firm C so that the post-acquisition market would exhibit the following shares: B+C = 65% A = 35% a. What is the pre- and postmerger HHI and the change in the HHI resulting from the merger? Premerger HHI Postmerger HHI Change in the HHI

Answer 1

HHI= s1^2 + s2^2 +s3^2+......sn^2

where sn represents market share

premerger HHI= 35^2 + 41^2 +24^2 = 3482

Post Merger HHI= 35^2 + 65^2 =5450

Change In HHI=1968

Particulars
Premerger HHI	3482
Post Merger HHI	5450
Change In HHI	1968