Question: Suppose that the only two firms in an industry face
Suppose that the only two firms in an industry face the market (inverse) demand curve p = 100 – Q. Each has constant marginal cost equal to 10 and no fixed costs. Initially, the two firms compete as Cournot rivals (Chapter) and each produces an output of 30. Why might these firms want to merge to form a monopoly? What reason would antitrust authorities have for opposing the merger?
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