There are three banks in East Panhandle.First State Bank which currently has 25 percent of the deposits,Second State Bank which currently has 40 percent of the deposits and Third State Bank which has the rest.Compute the share of the Third State Bank in the market.Suppose First State Bank and Third State Bank propose to merge in order to compete with Second State Bank.According to the Department of Justice Guidelines,would this merger be allowed?

Question

Quizplus · Accepted Answer

Since Second State Bank already holds 40 percent of the deposits, allowing a merger between First State Bank and Third State Bank would create a highly concentrated market. This type of market concentration is often not allowed under Department of Justice Guidelines, making it highly unlikely that the merger would be allowed.

There Are Three Banks in East Panhandle