5. Mergers Flashcards
1
Q
Horizontal mergers
A
Where competitors become one firm. It can form cartels
2
Q
Vertical mergers
A
Firms at different levels of the supply chain or with complementary goods join together
3
Q
What is double marginalisation?
A
Where there is an upstream supplier who is a monopolist and a downstream firm who is also a monopolist
4
Q
What happens when an upstream and downstream monopolist merge together?
A
Higher profits and higher consumer surplus are achieved
5
Q
When will vertical mergers not be beneficial?
A
If there are multiple upstream and downstream firms
