HHI, Managerial Economics

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Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel- Drive tractors consisted of five firms. The market was highly concentrated, with a herfindahl-Hirschman index of 3,025. Case’s share of the market was 27 percent, while Fiat comprised just 13 percent of the market. If approved, by how much would the HHI increase?

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