1. Under what circumstances, and why, would the government be opposed to a merge
ID: 1245816 • Letter: 1
Question
1. Under what circumstances, and why, would the government be opposed to a merger of two firms? How does the Justice Department decide which mergers to challenge?2. Explain the difference between fixed-production technology and variable-production technology. Should the government set a goal of reducing the marginal social cost of pollution to zero in industries with fixed-production technology? Should they do so in industries with variable technology?
3. What is the “regulatory dilemma”? That is, what trade-offs do regulators have to consider when deciding how to control a natural monopoly?
4. What is the underground economy? What is the impact on the underground economy of instituting a tax on a certain productive activity?
Explanation / Answer
Sorry but under cramster rules I am only allowed to answer one question, I will answer the first one, private message me if you have any issues. 1. A government would opposed the merger of two firms if the merger will cause a monopoly or destroy competition. For instance, if verizon, at&t, and sprint merged into one company they will have control of the wireless industry. This means that they could price fixed (charge consumers a ridiculously high price for cell phone use) because there would be no other prices in which consumers could get wireless service. Ultimately, the government would challenge any mergers that would monopolize an industry or prevents competition.
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