In January 2007, XM enjoyed about 58 percent of satellite radio subscribers, and Sirius had the remaining 42 percent. Both firms were suffering losses, despite their dominance in the satellite radio market. In 2008, the Department of Justice decided not to challenge a merger, and these two firms united to become Sirius XM.

(a) What is the 4-firm concentration ratio before the merger for the satellite radio industry?

Please show your calculations

(b) What is the Herfindahl-Hirschman index before the merger for the satellite radio industry?

Please show your calculations.

(c) What is the 4-firm concentration ratio after the merger for the satellite radio industry? Please

show your calculations

(d) What is the Herfindahl-Hirschman index after the merger for the satellite radio industry?

Please show your calculations.

(e) Explain why, even with your answers to (c) and (d), the government still approved the

merger.