Answer:
A. 3,789
B. 100%
C.5,000
Explanation:
(a) Total market ($'000) = 310 + 725 + 405 = 1,440
Firm 1 share = 310 / 1,440 x 100 = 21.53%
Firm 2 share = 725 / 1,440 x 100 = 50.35%
Firm 3 share = 405 / 1,440 x 100 = 28.12%
HHI = (21.53)2 + (50.35)2 + (28.12)2 = 3,789
(b) Since there are only 3 firms in market, therefore the four-firms concentration ratio will be 100% b
(c) Total revenue share of the two firms = (310 + 405) / 1440 x 100 = 49.65%
Post-merger HHI = (49.65)2 + (50.35)2 = 5,000
Yes. If the guideline considers any post-merger HHI above 1800 as highly concentrated market, this merger will be probably attempt to block a horizontal merger between two firms with sales.
