Calculation of Change in the HHI Associated with a Merger The Justice Department has been asked to review a merger request for a market with the following four firms.
What is the HHI for the existing market?

Question

Quizplus · Accepted Answer

To calculate the HHI for the existing market, we add the squares of each firm's market share percentage. 
HHI = (0.25)^2 + (0.25)^2 + (0.25)^2 + (0.25)^2 
HHI = 0.0625 + 0.0625 + 0.0625 + 0.0625 
HHI = 0.25 
To determine the change in HHI associated with a merger, we need to consider the market shares of the merging firms and their competitors. If the merger would result in a combined market share of more than 50%, it would likely result in a significant increase in the HHI, indicating a less competitive market. Without additional information about the merger request, we cannot accurately calculate the change in HHI.