A. The effects of the merger on the market’s
concentration ratio would be wide in the amount . One main effect would be the
price of the merger and the effects of the price to the company. Another would
be the effect it would have on the competitors . It might put some companies in
a position where they might have to merge with another company in order to stay
in business . In addition to that the merger would make the concentration ratio
effect the market. The effects of the merger on the Herfindal-Hirchman index
would somewhat match the ones of the market’s concentration ratio. The HHI is a
commonly accepted measure of market concentration. So the effects of the market
concentration ratio would have the same effects on the HHI .
guidelines call for close scrutiny of mergers in moderately concentrated
markets (HHI between 1,500 and 2,500) if the resulting HHI increase is more
than 100 to 200 points. This rule would apply to the AT&T merger with
T-Mobile in several ways . One main way is that the market price change for the
companies . This would change competitors price as well .The increase between
100 to 200 points would effect the competitors negatively . The hyptuhetical
merger between T-Mobile and TracFone when have different outcomes . One main
way would be the prices would rise in a positive way . This would be difficult
on the other competitiors because the placing of the market standings of the
phone companies . This scenario would have positive outcomes .
argued that the merger would extend its network, providing more reliable and
faster cell phone service (particularly to existing T-Mobile customers who on
average have lower-grade service plans at cheaper rates). With this merger it
would extend the network but it also does bring doubts . Market Observers were
worried that after the merger the company would raise the cellular rates .
There will pros and cons with this particular scenario of the merger . One
major pro would be the expansion of the network . This would bring more customers
as well by the expansion of the network . One major con would be the cost for
the customers . This would mean the cost for phone plans would “sky rocket” .
The cost would effect the market in a major way . It would make the competitors
react adversely by lowering their prices and offer better plans for lower
price. This would be the pros and cons of the argument that the merger would
extend its network.