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Economics
Economics Today
Chapter 26
Q. B - For Critical Thinking

Chapter 26: Q. B - For Critical Thinking (page 583)

What would be the revised HHI value if the top dozen firms decided to conduct a horizontal merger and offer a single "Top 12 Tablet" product?

Short Answer

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The leading firms in this area are Strategy&, Kearney, LEK, Oliver Wyman, and Roland Berger. Accenture, Booz Allen, Deloitte, KPMG, EY-Parthenon, and PwC are among the accounting, financial, and technology businesses.

Step by step solution

01

Step 1:Introduction.

DEBUT OF THE 'Herfindahl-Hirschman Index - HHI'. The closer a market gets near a monopoly, the more concentrated it is (and the lower its competition). According to the Herfindahl-Hirschman Index, if an industry only had one company, that company would have a monopoly (HHI).

02

Step 2:Top dozen firms

The leading firms in this area are Strategy&, Kearney, LEK, Oliver Wyman, and Roland Berger. Accenture, Booz Allen, Deloitte, KPMG, EY-Parthenon, and PwC are among the accounting, financial, and technology businesses.

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Most popular questions from this chapter

Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 35 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 10 percent market share. What is the four-firm concentration ratio for this industry?

Last weekend, Bob attended the university football game. At the opening kickoff, the crowd stood up. Bob therefore realized that he would have to stand up as well to see the game. For the crowd (not the football team), explain the outcomes of a cooperative game and a non-cooperative game. Explain what Bobs "tit-for-tat strategic behavior" would be if he wished to see the game.

Identify features of an industry that help or hinder efforts to form a cartel that seeks to restrain output and earn economic profits

Suppose that a firm located in Cleveland, Ohio, has entered the same industry as the Dallas company discussed in Problem 26-14. The new firm captures a 5 percent market share, and the market share of one of the smallest three original incumbents declines to 5 percent as well. After the Cleveland firm's entry into the industry, what are the values of the four-firm concentration ratio and of the Herfindahl-Hirschman index?

Characterize each of the following as a positive-sum game, a zero-sum game, or a negative-sum game.

a. You play a card game in your dorm room with three other students. Each player brings \( $5$ to the game to bet on the outcome, winner take all.

b. Two nations exchange goods in a mutually beneficial transaction.

c. A thousand people buy \)1 lottery tickets with a single payoff of $ $800$ .

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