Respuesta :

The index that the U.S. government currently uses to determine whether a merger should be allowed is the ​four-firm concentration ratio.

What is the Herfindahl index ?

  • Another indicator of industry concentration is the Herfindahl Index, which is calculated by adding the squared market share percentages of all companies in the sector.
  • In general, industry concentration decreases as Herfindahl decreases.

Under what conditions will the government approve a merger?

If the government believes that a merger will result in lower prices, more dependable goods and services, and a more efficient industry, it will be approved.

What is FTC approval?

  • According to the new FTC policy, parties who settle a merger investigation with the FTC can anticipate (at least) a ten-year post-settlement period during which the parties must obtain.

Learn more about Herfindahl index

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