Special power to regulate and scrutinize merger

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Reference no: EM132223850

Government justice department has special power to regulate and scrutinize merger. Anti Trust law has given power to government to regulate mergers between firms.

Merger between firms might lead to fall in average cost of production. Merger leads to efficiency in production system of firms. Available resources are utilized optimally. Thus, it increases welfare of public.

But there might be somewhat different intention of merged firms. Merging between firms reduces competition in the market. Fall in competition incentivise firms to increase price of products by reducing quantity. Thus, consumer surplus would be reduced.

Reference no: EM132223850

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