8 years ago
Mergers Raise Prices, Not Efficiency
Economies need competition to work. Almost all basic economic theories, including supply and demand itself, rely on the assumption that companies lower prices to undercut the competition whenever possible. If sellers can set whatever prices they like, that’s a monopoly. And as any good Econ 101 class will teach you, monopolies hold production below its economically efficient level, in order to extract extra profits. Monopolies replace the magic of the invisible hand with a distorting visible one, and the economy shrinks as a result.
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