The Antitrust Division of the Department of Justice carefully scrutinizes mergers. Why?
What will be an ideal response?
Mergers can lead to an increase in market power, which can lead to the abuses of that power discussed in the text. In a market in which concentration is high and/or entry is difficult (the market is not contestable), a merger can have adverse consequences for buyers of the good or service. Under these conditions, the Department of Justice will often oppose a merger. Guidelines that indicate whether the Department of Justice is (or is not) likely to seek to block a merger were loosened in announcements in 1982, 1984, and 1991, compared to original guidelines dating from 1968. Although mergers can have public benefits (such as permitting economies of scale or scope, or “synergism” when two firms bring special skills or resources together, or permit a reduction in risk), critics have pointed out that not all mergers actually have the expected benefits. To the extent that a merger may affect economic well-being, government should pay attention to merger activity.
You might also like to view...
Refer to Figure 7-3. What is the value of domestic producer surplus without a quota?
A) $5 million B) $15.75 million C) $38.5 million D) $53.5 million
Standardization of derivative contracts
A) increases their liquidity. B) is the rule with respect to contracts whose underlying asset is a financial security, but not for contracts whose underlying asset is a commodity. C) is the rule with respect to contracts whose underlying asset is a commodity, but not for contracts whose underlying asset is a financial asset. D) has been proposed many times by financial analysts, but has not yet been carried out by the SEC.
Inflation can cause changes in retail prices.
Select whether the statement is true or false. A. True B. False
"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?
a. labor only b. land only c. capital only d. land, labor, and capital