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4: Application Find a relatively recent merger and try to calculate the HHI of the relevant market pre and post merger. CommeFind a relatively recent merger and try to calculate the HHI of the relevant market pre and post merger. Comment on whether you believe the merger will increase market concentration too much. Explain how you chose the relevant market.

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Answer #1

HHI measures the market concentration. The squares if each market share is calculated and then the summation of all the squares of the market share is calculated. After a merger takes place in an industry then the market share of that particular industry increases in the market, hence the concentration of the Industry increases in the market. In most cases after the merger takes place the market share increases of the particular industry as two individual firms are not there and only one firm is there. So, the market concentration increases of that industry. However, how much the market concentration increases depends on the size of the new firm and it's elasticity of the goods.

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