The behavioral approach to antitrust regulation assumes A. A Herfindahl index greater than 1800 is going...
The behavioral approach to antitrust regulation assumes
A. A Herfindahl index greater than 1800 is going to be anti-competitive.
B. A Herfindahl index greater than 1000 is going to be anti-competitive.
C. The threat of entry may limit the ability of a dominant firm to raise prices
D. If a firm has more than 60% of the market share then the government should take action to break it up or otherwise create competition.
Homework Answers
HHI of less than 1500 is competitive market
HHI between 1500-2500, is moderate concentrated market
HHI greater than 2500 is highly concentrated market.
According to above three line option A and B is incorrect. Option D is also incorrect as there are some industries where some firms owns market share of greater than 60% and that could be due to demand of market forces, forcible government should not break it up, if there is requirement to break it up, then it should be done but not in each case. Option C is correct as entry of firms limit the dominant firm to raise the prices because if they raise the prices, they would loose the market share if any firm enters the market.
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