Benefits and drawbacks of merger

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Advantages of mergers
▪ Economies of scale – bigger firms more efficient
▪ More profit enables more research and development.
▪ Struggling firms can benefit from new management.

Disadvantages of mergers
▪ Increased market share can lead to monopoly power and higher prices for consumers
▪ A larger firm may experience diseconomies of scale – e.g., harder to communicate
and coordinate.