In most cases of overcapacity mergers, both companies are usually already large enough to be operating at a minimum efficient scale.

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Overcapacity mergers typically occur when there are too many firms competing in a particular industry, resulting in excess production capacity and price competition. In this scenario, both companies involved in the merger would likely already be large enough to be operating at a minimum efficient scale (MES) in order to be competitive. By merging, the companies can eliminate excess capacity and gain economies of scale, ultimately improving their profitability.

In Most Cases of Overcapacity Mergers, Both Companies Are Usually