regulation to prevent similar occurrences in the future. Regulatory capture occurs when the regulated
industries end up having a strong influence over what regulations exist.

Self-Check Questions

1. Is it true that a merger between two firms that are not already in the top four by size can affect both the

four-firm concentration ratio and the Herfindahl-Hirschman Index? Explain briefly.

2. Is it true that the four-firm concentration ratio puts more emphasis on one or two very large firms, while

the Herfindahl-Hirschman Index puts more emphasis on all the firms in the entire market? Explain

briefly.

3. Some years ago, two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System,

wanted to merge. One possible definition of the market in this case was “the market for intercity bus

service.” Another possible definition was “the market for intercity transportation, including personal cars,
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