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There are 5 firms with sales of firm1=$6.0million, firm2=$15.0million, firm3=$16.0 million, and the remaining two firms have $4.0 million each. Firm1 and Firm2 wish to

  1. There are 5 firms with sales of firm1=$6.0million, firm2=$15.0million, firm3=$16.0 million, and the remaining two firms have $4.0 million each. Firm1 and Firm2 wish to merge. How much does the Herfindahl Hirschman Index change if the firms are allowed to merge?
  2. There are 5 firms with sales of firm1=$19.0million, firm2=$11.0million, firm3=$6.0 million, and the remaining two firms have $4.0 million each. Firm1 and Firm2 wish to merge. What is the new Herfindahl Hirschman Index (HHI)?

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