Question 9
Basedontheinformationgiven,indicatewhetherthefollowingindustryis best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly. Explain
a. Industry A has a four-firm concentration ratio of 0.005 percent and a Herfindahl-Hirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.
b. Industry B has a four-firm concentration ratio of 0.0001 prcent and Herfindahl-Hirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.
c. Industry C has a four-firm concentration ratio of 100 percent and Herfindahl- Hirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.
d. Industry D has a four-firm concentration ratio of 100 percent and Herfindahl- Hirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76.
Question 14
Which of the following would most likely be scrutinized under the FTC and DOJ Horizontal Merger Guidelines? Explain
a. Two major players in Internet services and retailing-Amazon.com and eBay-merge.
b. Cigarette maker Philip Morris merges with the Miller Brewing Company.
c. Lockheed Martin, a large firm that manufactures aircraft, merges with United States Steel