1) If you were an economist for a firm that wanted to merge, would you argue tha
ID: 1096468 • Letter: 1
Question
1) If you were an economist for a firm that wanted to merge, would you argue that the three-digit or five-digit NAICS industry is the relevant market? Why?
2) Suppose you are an economist for Mattel, manufacturer of the doll Barbie, which was making an unsolicited bid to take over Hasbro, manufacturer of the doll G.I. Joe.
a. Would you argue that the relevant market is dolls, preschool toys, or all toys including video games? Why?
b. Would your answer change if you were working for Hasbro?
3) Is a contestable model or cartel model more likely to judge an industry by performance?
a) Cartel model or Contestable market model?
Explain your answer.
4) Distinguish the basis of judgment for the Standard Oil and the ALCOA cases.
5) What is the difference between the contestable market model and the cartel model of oligopoly?
6) Is an oligopolist more or less likely to engage in strategic decision making compared to a monopolistic competitor?
7) Which industry is more highly concentrated: one with a Herfindahl index of 1,200 or one with a four-firm concentration ratio of 55 percent?
8) Discuss the effect of antitrust policy in the:
a. monopolistic competition model.
b. cartel model of oligopoly.
c. contestable market model of oligopoly.
A five-digit industry so that the market would be more broadly defined. A five-digit industry so that the market would be more narrowly defined. A three-digit industry so that the market would be more broadly defined. A three-digit industry so that the market would be more narrowly defined.Explanation / Answer
First question is answered below.
NAICS is a digit-wise hierarchical classification code system, offering five levels of detail. Each digit in the code shows progressively narrower categories and more the digits in the code, greater the classification detail.
Correct option: (d) A three-digit industry so that the market would be more narrowly defined.
Reason: More narrowly defined the industry, easier it would be to merge.
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