Question

What are the pros and cons of the corporate consolidations of market power? Why do people support strengthening enforcement of antitrust laws?

Answer 1

Pros of corporate consolidation of market power

1 large market share

2 bigger customer base - because consolidation gives access to larger customers

3 largest revenues

4 competition reduces because of market power

5 creates economies of scale and scope - because of large scale production

6 reduces costs - by excess to experts and easy access to capital.

Cons -

1 can create monopoly like situation in the market

2 creates barrier to entry for new corporate firms

3 fue to large scale - red tapism, difficult in management of the corporation ,less accountability.

4 higher consumer prices because large market power and economies of scale they can behave like monopoly and increase prices of goods and services.

People support antitrust laws because

Large sorporates consolidation can lead to monopoly like situation in which high prices and exploitation of consumer happens.