Industry A is dominated by 10 large firms, each with sales of approximately $500 million per year.

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Industry A is dominated by 10 large firms, each with sales of approximately $500 million per year. A proposal to merge two of these firms was approved by the Justice Department as not violating the antitrust laws. Industry B is locally defined and much smaller. It is dominated by three small firms, each selling about $50 million per year. A merger between two of these companies was prohibited under the antitrust laws. Explain the logic under which the merger of two $500 million giants can be allowed while the relatively insignificant merger of two small companies is disallowed.

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