HHI_index_and_exercise-1

HHI_index_and_exercise-1 - Professor Rubin Spring 2010 Take...

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Professor Rubin Spring 2010 Take Home Assignment I Read the description and complete the exercise below. Deadline: Must be submitted in class on April 29 th . No email submissions accepted . The assignment is worth 12 points. The U.S. government wants to promote competitiveness of markets and avoid the situation when few firms hold a significant portion of the market and exert monopoly power. Mergers of large companies in a market that is already concentrated raise concerns of the Federal Trade Commission and prompt government investigation. A common measure of market concentration is the Herfindahl-Hirschman Index – HHI. It is calculated by summing the squares of the market share of each firm competing in a market. The HHI is expressed as: 2 2 3 2 2 2 1 ... n S S S S HHI + + + + = , where S i is the market share of i th firm. The Federal Trade Commission issued guidelines stating which mergers raise competitive concerns. The Agency (the FTC) divides the spectrum of market concentration as
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This document was uploaded on 11/01/2011 for the course 220 102 at Rutgers.

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HHI_index_and_exercise-1 - Professor Rubin Spring 2010 Take...

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