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Mergers and the Herfindahl-Hirschman Index (HHI) definitions

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  • Merger
    A combination of two separate firms into a single entity, often altering market structure and competition.
  • Horizontal Merger
    A union of firms within the same industry, often scrutinized for its potential to reduce market competition.
  • Vertical Merger
    A combination of firms at different production stages, typically raising fewer regulatory concerns.
  • Market Power
    The ability of a firm or group to influence prices or control market outcomes due to their size or position.
  • Competition
    The rivalry among firms striving for greater market share, often benefiting consumers through better choices.
  • Herfindahl-Hirschman Index
    A numerical measure of market concentration, calculated by summing the squares of firms' market shares.
  • Market Concentration
    The extent to which a small number of firms dominate total sales or output in an industry.
  • Market Share
    A firm's portion of total industry sales or revenue, expressed as a percentage of the market.
  • Monopoly
    A market structure where a single firm controls the entire supply, holding 100% of market share.
  • Regulatory Approval
    Official permission required from government authorities before firms can complete a merger.
  • Low Concentration
    A market condition indicated by an HHI below 1500, suggesting minimal dominance by any firm.
  • Moderate Concentration
    A market state with an HHI between 1500 and 2500, where mergers receive increased regulatory scrutiny.
  • High Concentration
    A scenario where the HHI exceeds 2500, signaling significant market dominance and likely regulatory intervention.
  • Industry
    A group of firms producing similar or related products, forming the context for market competition and mergers.