Assume you are working for the Department of Justice in USA, and your task is making sure each sector remains competitive. You use HHI as the main indicator measuring competitiveness. You are told to make sure to keep HHI below 2000. Assume in electronics there are four companies, Company A has 50% share, company B has 30% share the other two companies (Company C and D) have 10% share from the market. Calculate the initial HHI. What action would you take to make sure HHI is below 2000? (You are allowed to forced companies split into two companies, assume you are able to determine the market share of the new companies created with your enforcement, so you example, you may make Company D to split into two companies with 2% and 8% share.) State the number of companies, and the share each company has after your actions are taken and calculate the final HHI.
