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3 years ago

Firm Market Share (%)

Business

1 answer:

vichka [17]3 years ago

4 0

Answer:

Both rise

Explanation:

The Herfindahl index is calculated by squaring the market share of firms and then adding it.

The four firm concentration ratio = 0.2^2 × 4 = 0.16

If A and F merges, their market share becomes 20%+10%=30%

The four firm Herfindahl index = 0.3^2 +( 0.2^2 × 3) = 0.12 + 0.09 = 0.21

The concentration ratio before the merger = 20% x 4 = 80%

After the merger it becomes (30 + 20 + 20 + 20) = 90%

From the calculations, they both increase

I hope my answer helps you

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