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8. There are 7 firms in an industry. Firms 1 and 2 each have a 20% share and the other 6 firms each have a
8. There are 7 firms in an industry. Firms 1 and 2 each have a 20% share and the other 6 firms each have a 7.5% share. Firms 7 and 8 decide to merge Calculate the pre-merger and post- merger Herfindahl-Hirschman Index (HHI). (5 marks) (u) Use the table below to evaluate the likelihood of an antitrust challenge. (3 marks) HHI Concentration Level and Possible Government Action Post-Merger HHI Concentration Change in HHI Government Action Less than 1,000 Not concentrated Any amount No action 100 or more Possible challenge Between 1,000 and 1,800 Moderately concentrated More than 1,800 Highly concentrated 50 or more Challenge
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