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A Characterization of the Herfindahl Hirschman Index and its use in the Horizontal Merger Guidelines

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  • Hernán Vallejo

Abstract

This article characterizes the Herfindahl Hirshman Index and its use by the Department of Justice and the Federal Trade Commission of the United States, in their Horizontal Merger Guidelines. The characterization maps ranges of the index with the level of market concentration and its changes due to horizontal mergers and acquisitions, in terms of the number of firms operating in the market and the market share of the largest active firm. The article aims to provide alternative and graphic approaches that may contribute to analyze horizontal mergers and acquisitions in an easier and expedited way, from a market concentration perspective and before there are any changes in strategic interactions or market equilibria.

Suggested Citation

  • Hernán Vallejo, 2021. "A Characterization of the Herfindahl Hirschman Index and its use in the Horizontal Merger Guidelines," Documentos CEDE 19422, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:019422
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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/50542/dcede2021-32.pdf
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    References listed on IDEAS

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    1. Gideon Rosenbluth, 1957. "Concentration in Canadian Manufacturing Industries," NBER Books, National Bureau of Economic Research, Inc, number rose57-1, March.
    2. Gideon Rosenbluth, 1955. "Measures of Concentration," NBER Chapters, in: Business Concentration and Price Policy, pages 57-99, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Horizontal Merger Guidelines; Herfi ndahl Hirshman Index; Market Concentrationand Enhanced Market Power;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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