Level of market concentration

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Suppose that the doodad market has only 5 firms, each of which has 20% market share.

a. What market structure is this?

b. If two of the firms in this market merge to form one firm with 40% market share (and the other three firms each maintain their 20% market share), how will concentration in the doodad market, as measured by HHI, change? Show the necessary calculations and explain if this merger would cause the DOJ change their "rating" of the level of market concentration?

Reference no: EM132484481

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