Question

Market share in the Widget industry Firm name Market share Big W 50 Widico 40 Widgotech 9 Widgette 1 Using the market shares in the table above, if Big W wants to buy Widgette, the Federal Trade Commission will probably approve the merger because the industry is moderately concentrated and the increase in the Herfindahl-Hirschman index (HH) is small enough. o block the merger because the industry is highly concentrated (HHI exceeds 2,500) and the increase in the HHI is too much. block the merger because the industry is moderately concentrated (HHI between 1,500 and 2,500) and the increase in the HHI is too much. approve the merger because the industry is highly concentrated (HHi exceeds 2,500) but the increase in the HHI is small enough.

Answer 1

before merger the HHI was 4181 exceeds the 2500 implies industry is highly concentrated. And after merger the increased in HHI is more than 100 ponits implies the regulation authority will block the merger.

Firm Name market share (market share )2 Big w 50 2500 widico 40 1600 81 1 Widgatech widgette HHI Before merger 4 { so2 = 4181 after merger 2 from name market share (market share] 51 2601 Big o t widge He widico 40 1600 81 wid gotech HHI after mesger 4282.