Which of the following is true of an industry’s Herfindahl-Hirschmann Index (HHI
ID: 2756668 • Letter: W
Question
Which of the following is true of an industry’s Herfindahl-Hirschmann Index (HHI)?
A low score indicates a monopolistic market
It is used to determine the amount of collusion in an industry
It measures the amount of government involvement in an industry
A high score indicates an oligopolistic market structure
Higher scores indicate increasing power of labor over wages
A low score indicates a monopolistic market
It is used to determine the amount of collusion in an industry
It measures the amount of government involvement in an industry
A high score indicates an oligopolistic market structure
Higher scores indicate increasing power of labor over wages
Explanation / Answer
A high score indicates an oligopolistic market structure
The U.S. Department of Justice uses the HHI in guidelines for evaluating mergers. An HHI of less than 1000 represents a relatively unconcentrated market, and the DOJ likely would not challenge a merger that would leave the industry with an HHI in that range. An HHI between 1000 and 1800 represents a moderately concentrated market, and the DOJ likely would closely evaluate the competitive impact of a merger that would result in an HHI in that range. Markets having an HHI greater than 1800 are considered to be highly concentrated; there would be serious anti-trust concerns over a proposed transaction that would increase the HHI by more than 100 or 200 points in a highly concentrated market.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.