Why Staples and Office Depot should have merged (blocked by FTC and DOJ).

·Problem:The FTC is trying to block the Staples/ speckle Depot spinal fusion because it has reason to believe that the proposed nuclear fusion reaction would violate division 7 of the Clayton Act: it may change magnitude competition or bring to pass a monopoly. ·Staples, division Depot, and emplacement Max may be the largest office tally retailers on the merchandise, but what is there various(prenominal) market share? With forbidden these facts the HHI cannot be calculated. If they each control nearly 10% of the market, the proposed merger would hardly be a problem. The FTC uses a very narrow fire to defining the office supplies market. · next the previous point we cannot gear up the market because we do not know the relative size of it of each firm. If the merger go aways in a 10% market share, this can hardly be considered a market force out or monopoly. In this case, the merger does not violate Section 7 of the Clayton Act and is not illegal. ·The FTC is q uick to point out that prices are much reduce in regions where two superstores populate rather than just adept or the other. The FTC concludes from this that a merger result raise consumer prices. A good explanation for this is that in areas served by both Office Depot and Staples have full(prenominal) population densities than do areas in which only one of these retailers is present.

higher(prenominal) population densities mean greater sales revenue per upstanding foot per day - which in turn means that, firms in high-population regions can spread their fix costs more widely. The result is lower prices, not h igher prices. ·The FTC argues that prices w! ill be likewise high where only the unite superstore exists. However, the price increase will be small ascribable to the threat of competition from Office Max and other local anaesthetic office put up retailers. If prices are... If you want to get a integral essay, order it on our website: BestEssayCheap.com

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