Question

What do you see as the benefits and drawbacks of this merger for both consumers and the firms? Do you think it should be approved? Why or why not? In general, do you think monopolies are good or bad for consumers? Why?

Answer 1

Explanation:

A merger can be defined as the combination of two companies to form a new larger company with more resources. It can occur through agreements or acquisition.

1- For companies, the benefits of a merger can be:

• Economies of scale,
• Market gain,
• Greater profitability,
• Increased research and development.

The drawbacks can be:

• Communication failures due to company growth ,
• Difficulties in coordinating processes,
• Conflicts between organizational values .

2- For consumers the benefits can be:

• Most innovative and technological products and services,
• Greater corporate responsibility for society ,
• Increased company reliability.

The drawbacks can be:

• Higher prices ,
• Monopoly power.

The monopoly is a bad market configuration for the consumer, due to the lack of competition in the market, which leads to a production restriction and obliges the consumer to pay the prices established by the monopoly companies, without the consumer having the choice.