Final answer:
The holding company analysis procedure includes the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI) as two key metrics, both with distinct approaches to measuring market concentration and influence of firms within a market.
Step-by-step explanation:
The two sections of the holding company analysis procedure are commonly represented by the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI). Both these metrics are used to evaluate the level of concentration in a market and have implications for assessing the competitive landscape, especially in the context of mergers and acquisitions. However, they have certain limitations, such as the assumption that the market is well-defined and that competitive conditions across industries are comparable enough for these broad measures to be reliable indicators of market concentration. In light of these weaknesses, antitrust regulators have evolved their strategies in recent times to ensure a more nuanced approach.
Contrast between the four-firm concentration ratio and the Herfindahl-Hirschman Index lies in their emphasis: the four-firm concentration ratio focuses more on the largest firms in the market, potentially overlooking the influence of smaller firms, whereas the HHI takes into account the market share of all firms, giving a more comprehensive view of the market's competitive environment.