ECON1056: Price Theory - Industry Analysis Report on Merger Decision

This report analyzes the economic implications of a proposed merger between Big Industries and ConCorp in the pre-mixed concrete industry. The analysis compares the pre-merger and post-merger scenarios, focusing on market dynamics, output, price, profit, and consumer surplus. The study uses a Cournot oligopoly model to assess the impact of the merger on market competition and efficiency. The report finds that the merger would reduce competition, increase market power for the remaining firms, and result in higher prices and profits at the expense of consumer welfare. The recommendation is that the regulatory authority should not approve the merger, as it would be better to maintain three competitors in the market rather than allow consolidation to two firms. The analysis includes detailed calculations of marginal revenue, marginal cost, and profit under both pre-merger and post-merger conditions, supporting the conclusion that the merger would be detrimental to market efficiency and consumer interests.