ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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true
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false
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Either A or B
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None of the above
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Detailed explanation-1: -The most obvious benefit is an increased market share or market power. When the two companies merge, they also combine the product base, technology, and services that are available on the market. With more products under one name, the new company can increase its foothold among consumers.
Detailed explanation-2: -A horizontal merger eliminates a competitor, and may change the competitive environment so that the remaining firms could or could more easily coordinate on price, output, capacity, or other dimension of competition.
Detailed explanation-3: -However, as reflected in the 1984 Merger Guidelines, some vertical acquisitions can be anticompetitive. Vertical mergers can create or raise entry barriers that lead to higher prices or lower quality or innovation for consumers.
Detailed explanation-4: -Increase market share and reduce competition in the industry. Further utilize economies of scale (thus reducing costs) Increase diversification. Reshape the company’s competitive scope by reducing intense rivalry. Realize economies of scope. Share complementary skills and resources. 28-Dec-2022