1. Business
  2. Economics
  3. suppose that in the market for hospital gowns in a...

Question: suppose that in the market for hospital gowns in a...

Question details

Suppose that in the market for hospital gowns in a metropolitan area there are ten companies supplying the gowns. The sales of those ten companies are listed below:

Company

Annual Sales

A

3,072

B

6,124

C

10,901

D

7,878

E

6,540

F

1,289

G

9,632

H

4,454

I

7,612

J

13,107

  1. Calculate the Herfindahl index in this local market for hospital gowns.

2. At the end of the fiscal year, company J plans to acquire companies F and I. Assume that the sales of companies A, B, C, D, E, G, and H grow by 2% (round to the nearest whole number) but that the sales that were being made by companies F and I stay the same. Company J not only acquires companies F and I but also has growth at 5% rather than 2%. Calculate the new Herfindahl index.

  1. Based on your findings, do you think there will be regulatory pressure to prevent the acquisition?
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution