Vertical merger can have positive effect on welfare

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Reference no: EM132265794

SHORT RESPONSE-80 POINTS

In this section, you are presented with 5 separate short response problems each worth 20 points. You are required to answer whichever four you would like. When writing your answer, CLEARLY write the number of the problem at the top of the page. Graphs are not required in your response, but you are highly encouraged to reproduce any graphs or use any numbers/calculations that can help you communicate your answer more clearly.

Economic theory tends to agree that vertical integration has pro-competitive or competitively neutral effects. Despite this, laws and court cases surrounding vertical mergers have been particularly harsh.

a) Discuss at least two ways that a vertical merger can have a positive effect on welfare.

b) Describe one vertical merger court case where the Supreme Court appeared to have ruled in a way that lowers welfare. Be sure to be explicit about what the decision was, and what aspect of economic theory was dismissed or ignored in the decision.

Reference no: EM132265794

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