Which of the arguments Staples and Office Depot made in defense of their proposed merger would be least defensible on economic grounds?
A)There would be substantial economies of scale.
B)The two firms were in competition with all other office supply stores, not just office supply superstores.
C)The history of low pricing by the two stores meant that they would not raise prices in the future after they merged.
D)Entry into the office supply market is relatively easy.

Question

Quizplus · Accepted Answer

The argument that the history of low pricing by the two stores meant that they would not raise prices in the future after they merged would be least defensible on economic grounds. This is because, in a merged entity, there would be reduced competition, and therefore, market power could potentially lead to price increases, irrespective of the historical pricing strategies of the firms.

Which of the Arguments Staples and Office Depot Made in Defense