Share
Explore BrainMass

oligopoly

TELEPACIFIC EXPANDS INTO TEXAS WITH TEL WEST PURCHASE, present two arguments. The first should argue in favor of the proposed merger, from the perspective of the firms. The second argues against the proposed merger from the perspective of the broader public interest. In those arguments, answer the following questions.
1. Explain the importance of competition among firms.
2. Explain whether the competitive environment in this industry benefits society or not.
3. Is a high degree of market concentration a boon or threat to consumers? Explain. Use either the allocative efficiency or dynamic efficiency arguments.
4. Can the oligopoly market structure benefit both consumers and businesses by forging common standards in industries that experience rapid technological change?
Retrieved from: http://www.channelpartnersonline.com/news/2011/06/telepacific-expands-into-texas-with-tel-west-purc.aspx

Solution Preview

TELEPACIFIC EXPANDS INTO TEXAS WITH TEL WEST PURCHASE, present two arguments. The first should argue in favor of the proposed merger, from the perspective of the firms. The second argues against the proposed merger from the perspective of the broader public interest. In those arguments, answer the following questions.
1. Explain the importance of competition among firms.
From the perspective of the TelePacific and Tel West Network merger, the competition among the firms will improve because of the merger. The reasons for this are that the merged company will have economies of scale which will help reduce unit costs. Further, the TelePacific and Tel West Network can improve the services it offers by upgrading the networks and providing improved features with the services it offers. The merger will bring in new skills and technical expertise that will improve the services that TelePacific and Tel West Network combine will provide.
From the perspective of broader public, whenever there is a merger of the TelePacific and Tel West Network type, there is a fall in customer satisfaction. There are more complaints. Aggressive cost cutting after mergers harms customer service. I has been observed that companies that have undergone mergers set any price they choose, simply because the customer has no choice. Further, the quality of services is likely to fall after the merger. It is expected that after the ...

Solution Summary

an oligopoly is discussed very comprehensively in this explanation..

$2.19