Which of the following is most likely to increase the Herfindahl index of a particular industry?
A)a horizontal merger between two of the industry's largest firms
B)a vertical merger between one of an industry's largest firms and one of the many input suppliers in the resource market
C)a conglomerate merger involving one of the industry's major firms
D)an agreement by all the industry firms to divide up the market among them

Question

Quizplus · Accepted Answer

A horizontal merger between two of the industry's largest firms increases the Herfindahl index by reducing the number of competitors and increasing the market share of the merged entity, thus concentrating the market further.

Which of the Following Is Most Likely to Increase the Herfindahl