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May 26, 2024

Context: Consider a major U.S. industry comprising only two companies.

General Question

Context: Consider a major U.S. industry comprising only two companies. Suppose that the two companies are considering merging to form a monopoly. The government typically scrutinizes such mergers because it believes these transactions can have adverse consequences for consumers (such as higher prices and lower quality).

Essay topic: Based on what you’ve learned in this course (you may use insights from perfect competition, monopoly, and/or game theory), explain why the merger between the two companies may lead to worse outcomes for consumers in this industry.

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