Mergers eliminate inefficient cross-subsidization, which can improve the efficiency of the merged companies and potentially benefit customers in the long run. However, it is possible that mergers could also lead to cost inefficiencies and reduced competition in the market. The other choices presented are not accurate statements about the effects of mergers.

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Mergers ________

Question 54

Multiple Choice

Mergers ________.

A) encourage competition in supply and distribution channels
B) eliminate inefficient cross-subsidization
C) yields cost inefficiencies that bring losses to customers
D) remove effective management

Correct Answer: