Question

I am working on Microeconomics 10th edition. There is no solution for the question below, can someone help me get the solutions?

In the 1990s Mattel proposed acquiring Fisher-Price for $1.2 billion. At the time, Mattel was a major player in the toy industry with 11 percent of the market. Fisher-Price had 4 percent. The other two large firms were Tyco, with a 5 percent share, and Hasbro, with a 15 percent share. In the infant/preschool toy market, Mattel had an 8 percent share and Fisher-Price had a 27 percent share, the largest. The other two large firms were Hasbro, with a 25 percent share, and Rubbermaid, with a 12 percent share.

a- What were the approximate Herfindahl and four-firm concentration ratios for these industries? (Assume all other firms in each industry had 1 percent of the market each.)

b- If you were Mattel’s economist, which industry definition would you suggest using in court if you were challenged by the government?

c- Give an argument why the merger might increase competition.

d- Give an argument why the merger might increase competition.

Answer 1