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An industry consists of three firms with sales of $380,000, $805,000, and $425,000.
a. Calculate the Herfindahl-Hirschman index (HHI). Instruction: Round to the nearest integer.
b. Calculate the four-firm concentration ratio (C4).
c. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, is the Department of Justice likely to attempt to block a horizontal merger between two firms with sales of $380,000 and $425,000?

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The Herfindahl–Hirschman Index, or "HHI," is a widely used indicator of market concentration.  The HHI is derived by squaring each rival firm's market share and then adding the obtained figures together.

What is the solutions to the required calculations?

(a) Total market (

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000) = 380 + 805 + 425 = 1,610

  • Firm 1 share = 380/ 1,610x 100 = 23.60%
  • Firm 2 share = 805 / 1,610 x 100 = 50.00%
  • Firm 3 share = 425 / 1,610 x 100 = 26.40%

HHI = (23.60)² + (50.00)² + (26.40)² = 3753.92

(b) Since there are only 3 firms in market, four-firms concentration ratio will be 100% or 1

(c) Total revenue share of the two firms = (380+ 425) / 1440 x 100 = 55.90%

Post-merger HHI = (55.90)² + (50.00)² = 5624.81

This merger will, in fact, be stopped. This is because the regulation deems any HHI exceeding 1,800 after a merger to be a highly concentrated market, and so this merger will most likely be blocked.

Learn more about Herfindahl-Hirschman index (HHI) at:
https://brainly.com/question/17149410
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