Week_2_Lecture

Week_2_Lecture - Demand and Market Conditions The...

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Demand and Market Conditions The elasticity of demand (e) for products tends to vary from industry to industry. Moreover, (e) for an individual firm’s product generally will differ from the market (e) for that product. In markets where there are no close substitute foe a given firm’s product, the (e) for that product will coincide with market (e) for the product group. In industries where many firms produce substitutes for a given firm’s product, the demand for the individual firm’s product will be more elastic than the overall industry demand.
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Integration and Merger Activity It differs across industries. Reasons for Merger: Reduce transaction costs. Reap the benefits of economies of scale and scope. Increase market power. Gain better access to capital markets. Management of one firm is doing a poorly job.
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Integration and Merger Activity Example of Vertical Integration: An auto manufacturer that produces its own steel, uses the steel to make car bodies and engines, and
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This note was uploaded on 04/14/2008 for the course ECON 149 taught by Professor Sohrabian during the Spring '08 term at UC Irvine.

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Week_2_Lecture - Demand and Market Conditions The...

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