The index that the U.S.government currently uses to determine whether a merger should be allowed is the
A)Herfindahl index
B)Schumpeter index
C)Dow Jones average index
D)consumer price index
E)four-firm concentration ratio

Question

Quizplus · Accepted Answer

The U.S. government currently uses the Herfindahl index (also known as the Herfindahl-Hirschman index or HHI) to determine whether a merger should be allowed. This index measures the level of concentration in a market by summing the squares of the market shares of each firm. A higher HHI indicates greater market concentration and potentially anti-competitive behavior. The Department of Justice and Federal Trade Commission usually challenge mergers that result in an HHI increase of more than 200 points in highly concentrated markets (HHI above 2500) and more than 100 points in moderately concentrated markets (HHI between 1500 and 2500).

The Index That the U