Against - monopoly by charging the lowest price(preliminary...

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Against: After the merger, Staple may have the market power to increase the price. Evidence shows that Office Depot and Staples’ office supply prices are lowest in the cities where all of the national office superstores complete. Prices are higher in markets where the only other competitor is OfficeMax and higher in those areas of the countries where Staples faces no other superstores rival. There are few close substitutes. None of the retailers selling some office supplies offers the one-stop shopping convenience of the office superstores. They can charge supracompetitive prices without causing customers to travel elsewhere for office supplies. Competition would be reduced after merger. They may become
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Unformatted text preview: monopoly by charging the lowest price (preliminary pricing) to fight out the competitors. Also, it is difficult for new entry. A new entrant into the office superstore market must enter both the local and national level to check anticompetitive pricing by market incumbents. The new entrant should establish a sufficiently large presence in each of the affected markets that the new entrant can achieve economies of distribution and advertising and ca effectively constrain pricing by local market participants. New firm has to be “critical mass”. However, there is little room for new stores. Since Staple and Office Depot enjoy the first-mover advantage....
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