Shortcomings of monopoly pricing strategy

Reference no: EM1316433

Earlier this year the Federal Government USA approved the merger between Sirius and XM satellite radio companies. The approval process was very lengthy and extremely costly. Millions of dollars were spent lobbying for or against the merger.

1. What, if any, shortcomings arise from a monopoly pricing strategy (efficiency and consumer surplus)?

2. Are there any circumstances under which these shortcomings are mitigated?

3. Did the government impose any requirements to ensure that the merged company is not able to exercise monopoly power in the satellite radio market? If so, what are those conditions and do you think they will work?

Reference no: EM1316433

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