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The small upstate town of Geneva has 10 burger shops whose respective shares of the local...

The small upstate town of Geneva has 10 burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 22%, 20%, 14%, 12%, 10%, 8%, 5%, 4%, 3%, and 2%.

  1. Based upon your classification of the market structure of Geneva's hamburger industry, how would you predict that these companies will behave (compete):
    1. What kind of price competition might you observe from these firms?
    2. What kind of non-price competition might you observe from these firms?
  2. If the second and third largest hamburger shops merged to form a single firm, what would happen to the 4-firm concentration ratio? Recalculate the 4-firm concentration ratio.
  3. If the second and third largest hamburger shops merged to form a single firm, what would happen to the 8-firm concentration ratio? Recalculate the 8-firm concentration ratio.
  4. If the second and third largest hamburger shops merged to form a single firm, what would happen to the HHI? Recalculate the HHI.
  5. If you were a prosecutor in the Antitrust Division of New York State Attorney General's Office, would you ignore or prosecute said merger? Explain. [NOTE: Even though the proposed merger is intrastate rather than interstate, assume that the from the US Justice Department Guidelines are applicable. See pp 18-19.]
  6. What non-quantitative [qualitative] factors might you weigh in deciding to approve or reject the merger?
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