Question

The Alliance is in fact all about economies of scale.  An alliance or a merger of competitors is almost always about economies of scale. Why?

Answer 1

An alliance or merger is always about Economies of scale becausethe only reason why a merger happens is to support each other with their existing technologies and specialisations and when mutually there is an exchange of these factors of production, what happens is that there is a reduction in the average cost with the increase in production due to more amount of specialisation then without merger or alliance. This is the reason why competitors usually come together so that there could be economies of scale and this would lead them to earn more profits together than individually.