Which one of the following is most likely to increase the Herfindahl index of a particular industry?
A)a conglomerate merger
B)a vertical merger
C)a price-fixing arrangement among all the industry firms
D)a horizontal merger

Question

Quizplus · Accepted Answer

A horizontal merger, which involves companies at the same stage of production in the same industry, directly reduces the number of competitors and increases market concentration, thereby increasing the Herfindahl index.

Which One of the Following Is Most Likely to Increase