There are 30 firms in an industry. What happens to that industry's four-firm concentration when the third- and fourth-largest firms merge?
A) Nothing, because their shares are already included in the concentration calculation.
B) The industry's concentration ratio will fall.
C) The industry's concentration ratio will increase.
D) It is impossible to know without more information.

Question

Quizplus · Accepted Answer

The concentration ratio is calculated by adding the market shares of the top four firms in the industry. By merging, the third- and fourth-largest firms become one, increasing their combined market share. This will increase the concentration ratio of the industry.

There Are 30 Firms in an Industry