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 involves the merger of firms operating within the same industry and selling similar products, which reduces competition and increases market power. This results in an increase in the Herfindahl index, which is a measure of market concentration.

Which One of the Following Is Most Likely to Increase