How much would the post merger herfindahl-index increase


Suppose firm A wants to merge with the firm B for $7.5 billion. Before the potential merger, market for good produced by the firm A and B consisted of 5 firms. The market was highly concentrated, with a Herfindahl-Hirschman index of the 2,621. Firm B's share of that market was 30 percent, while firm A comprised just 20 percent of the market. If approved, by how much would the post merger Herfindahl-Hirschman index increase? Do you think the DOJ would challenge the merger? Explain.

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Macroeconomics: How much would the post merger herfindahl-index increase
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