5. "Steakhouses" is one of the fastest growing categories of restaurants in the US, in part because of the expansion of several chains of this type of restaurant.The pie chart below gives some information on market shares within this category."All others" refers to restaurants with less than 1% market share.

The two leading chains, Inback and Shorthorn recently announced their intention to merge but are concerned about a Department of Justice (DOJ) challenge to the merger on anti-trust grounds.DOJ has said publicly that it is worried about the increase in market concentration which will result from the merger.

a. How would the DOJ measure market concentration?

5.b. How would its calculation of concentration change as a result of the merger? (A numerical answer, please.)

5.c. What argument would you suggest to the two companies as a way to defend the merger against the DOJ's challenge?What metric would you use to support your argument?

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