The box office revenues of various film distribution companies for 2001 are give

Question

The box office revenues of various film distribution companies for 2001 are given in the table. Calculate the four-firm concentration ratio and the HHI for the industry-. Recalculate these measures of industry' concentration if Fox were to purchase the film distribution business of Miramax. In each of the following situations, the firm might possibly be accused of a restrictive practice: exclusive dealing, minimum resale price maintenance, tie-in sales, or predatory' pricing. In each case, identify which restrictive practice might apply, and then explain briefly whether you think this behavior is more likely or less likely to be treated as an antitrust case. A firm is selling its new drug to reduce high blood pressure, but it requires that people who buy the drug also order a minimum quantity of low-fat foods from their website. A large retail store signs contracts to become the only store in a metropolitan area that can sell a certain brand of a special new vacuum cleaner. There is only one Peruvian restaurant in a certain town, and it is very popular. But then a Venezuelan restaurant with similar food opens down the street, and the Peruvian restaurant cuts its prices. A small airline that has been offering cheap flights from New York to London goes out of business, and the large airlines remaining in the market raise their prices substantially. A company selling a new brand-name camera requires that no retail store selling the camera will put the camera on sale. A local steel company has been selling its products to a local automobile factory for years. But now, the auto company says that it is planning to purchase lower-priced imported steel in the future. A large retail store signs a number of contracts so that it can be the only store in a large metropolitan area to sell all brands of vacuum cleaners.

Explanation / Answer

Distributor Revenue Share Four Firm Concentration Ratio HHI Warner 1228 0.15 0.487871 0.02 Universal 956 0.12 0.01 Paramount 892 0.11 48.79 0.01 Disney 886 0.11 0.01 Fox 856 0.11 0.01 Sony 730 0.09 0.01 MiraMax 609 0.07 0.01 New Line 573 0.07 0.00 10 Small Firms 1 139 0.02 0.00 2 139 0.02 0.00 3 139 0.02 0.00 4 139 0.02 0.00 5 139 0.02 0.00 6 139 0.02 0.00 7 139 0.02 0.00 8 139 0.02 0.00 9 139 0.02 0.00 10 139 0.02 0.00 Total 8121 HHI 0.09

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