3. (9) Penguin Random House (PHR) is trying to merge with Simon & Schuster (S&S). The Justice Department is suing to block the proposed merger on the grounds that it violates antitrust law. The Pre-Trial Briefs be found here:Pre-Trial Briefs

a.) (3) The DOJ is arguing the Herfindahl-Hirshmann Index (HHI) will increase by 891 points to 3113, well above the 2500 threshold of legality; the companies are arguing that the post-merger HHI will be far below this figure. Explain how there can be such a large disparity in the estimates of the HHI. What is it that determines which measure is accurate?

b.) (3) The DOJ argues that in addition to harming consumers through monopoly power, the merger would create too much "monopsony" power. Briefly explain difference between a monopoly and a monopsony. How might this merger create too much monopsony power. Note: you can find the full DOJ statementhere.

c.) (3) Do you think this merger should be approved or blocked? Briefly explain.