- First, you are to go to the Federal Trade Commission’s website at http://www.ftc.gov/bc/index.shtml and select one proposed merger for your paper. Then, in a group discussion board, present a complete description of the industry.
- Second, in another group discussion board, present two arguments: One in support of the merger and the other opposing the merger.
- Finally, write a 5-8 page paper that contains the industry description, and the two arguments.
Part 1) Industry Description:
- Describe the firms in the proposed merger. List their annual sales, and extent of their operations.
- From the firms' point of view, what are some of the incentives to consolidate?
- List and describe the firms in the industry.
- Describe the product, production methods, scale of production, and sources for raw materials. What technologies are used?
- Describe the competitive environment within the industry. Is there a dominant firm? Are the other firms follow or actively compete? How do they compete? (For example, by using price, advertising, quality or some other variable.)
- Report and interpret the 4 firm concentration ratio, the 8 firm concentration ratio and the Herfindahl Herschler Index for the industry.
Part 2) Two Arguments:
In a separate group discussion board, present two arguments. The first should argue in favor of the proposed merger, from the perspective of the firms. The second agrues against the proposed merger from the perspective of the broader public interest. In those arguments, answer the following questions.
- Explain the importance of competition among firms.
- Explain whether the competitive environment in this industry benefits society or not.
- Is a high degree of market concentration a boon or threat to consumers? Explain. Use either the allocative efficiency or dynamic efficiency arguments.
- Can the oligopoly market structure benefit both consumers and businesses by forging common standards in industries that experience rapid technological change?
Part 3) Written Report:
Write a 5-8 page paper that contains the information presented in your group discussion boards. Concentration ratios and descriptive statistics for various industries are available at the Census Bureau’s economic census web site: http://www.census.gov/epcd/www/concentration.html
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