Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 27: Q.22 (page 623)

Manufacturing firms based in Columbus, Ohio, and Erie, Pennsylvania, have proposed a merger. If they were to merge, the resulting value of the Herfindahl-Hirschman Index in the nationwide market for the product they produce would rise from 1,400 to 1,800. Under current U.S. antitrust guidelines, would this proposed merger raise concerns for the U.S. Justice Department or Federal Trade Commission?

Short Answer

Expert verified

No this proposed merger raise concerns for the U.S. Justice Department or Federal Trade Commission

Step by step solution

01

Given Information

US Antitrust Laws are also known as contest regulations, the US hostile to believe regulations shield the purchasers from out of line strategic approaches and guarantee fair rivalry in the open-market economy.

02

Explanation

According to the US against trust rules, there is no reason to worry till the HHI doesn't surpass 5000. For this situation, post-consolidation the HHI ascends from 1400to1800. Subsequently, there is no reason for worry for the FTC.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

The manager of a Pittsburgh shop wishes to sell on eBay a used telescope that is in good condition. The manager knows that prospective buyers perceive a 50-50 chance that the telescope is in good condition. If it is, buyers are willing to pay \(1,000, but if it is in poor condition, they will pay only \)200. What is the average amount a buyer will be willing to pay? Is there a lemons problem? Explain.

An years past, firms around the world have secretly engaged in collusive agreements to restrain production and push prices above competitive levels.

Evidence compiled by government officials investigating such agreements has revealed that conspiring firms often utilize similar methods of establishing and enforcing collusive restraints of trade. Most agreements, for instance, assign to each firm an allowed market share, a permitted region of operations, or an approved set of customers. In addition, participating firms commonly are required to exchange sales information so that they can monitor adherence to their agreements to restrain trade. In this chapter, you will learn why firms that typically utilize these techniques to formulate and maintain collusive agreements engage in secret conspiracies: Such agreements are illegal under U.S. antitrust laws.

Identify alternative theories aimed at explaining the behavior of regulators

Why do you suppose that assigning market shares, regions, or customers and exchanging sales information are the most common means of coordinating collusion?

Consider panel (b) of Figure 27-2. The quantity Q1 is 2,000units, the price P1 is \(2per unit, the average cost AC1 is \)4per unit, and the vertical distance to point C is $6per unit. What is the dollar amount of the losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q1 units?

A few years ago, the U.S. government created a "Do Not Call Registry" and forbade marketing firms from calling people who placed their names on this list. Today, an increasing number of companies are sending mail solicitations to individuals inviting them to send back an enclosed postcard for more information about the firms' products. What these solicitations fail to mention is that they are worded in such a way that someone who returns the postcard gives up protection from telephone solicitations, even if they are on the government's "Do Not Call Registry." In what type of behavior are these companies engaging? Explain your answer. (Hint: Are these firms meeting the letter of the law but violating its spirit?)
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free