computing hhi

2. Two industries are both made up of 9 firms. The markets shares of firms in the two industries are given in the following table. All numbers are in percents. a. Compute the 4-firm concentration ratios for these two industries. This measure of concentration is discussed starting on p. 258 of the book. b. Compute the Herfindahl-Hirschman Index (HHI) for the two industries. This measure is discussed starting on p. 259 of the book. c. Two of the big firms in Industry 2, each with a 20% market share, wish to merge into a single larger firm with a 40% market share. Compute the HHI for the 8 firms that would exist if the merger occurred. Shares would now be 40% for the merged firm, 20% for two firms, and 4% for the five small firms. What argument would you offer the Federal Trade Commission in favor of the merger, if you were asked to testify