Would you recommend the merger for economies of scale or for

Would you recommend the merger for economies of scale or for market share?

Solution

A merger occurs when two firms join together to form one. The new firm will have an increased market share, which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm gain more profits.

Again merger also helps in achieving economies of scale.

This occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers.

Different economies of scale include:

Therefore, it is recomended the merger for both economies of scale and for market share.