Question

Suppose that in the market for sunglasses, market share is divided among six companies in the following manner: Market Share Firm Sun Shades Cool Shades UV Shield Shady Eyewear Tinted Windows Sun Fashion Based on the Herfindahl index of the market for sunglasses, the FTC would a merger between UV Shield and Shady Eyewear

Answer 1

Since'; THHI = 5 245 22 +82 - 2 there', S, S2,S3 --- In are the market Share in percent (..) HHI = 182127 (8)2+(4) 27 (3)2+(21²4(1) 2 = 6724764 + 16+9+4+1 = 6818 When Herges occurs between UV Shield and Mady eyeweer than = 14+3=74. Need tHE = (82)2+(8)2+(4+3)² + 1212401721 - 6724764+49+4+1 = 6842 - Since the difference of New HHI and old HH I is = 6842 - 6818 (24

The value 24 is less than the 200 points which means it is safe to approve the merge

Hence federal trade commission(FTC) will approve the merge between UV shield and shady ideas

Hence merger will be approved