There are two satellite radio providers in the U.S.market,Sirius and XM Radio.The firms are proposed a merger,and it appears that the federal government will allow the merger to occur.Although the merger will create a single seller in this market,the existence of a monopoly may not have much impact on U.S.consumers.Which of the following statements are plausible reasons for the limited impact of the proposed merger?

Question

Quizplus · Accepted Answer

All three statements are plausible reasons for the limited impact of the proposed merger. A) Large fixed costs may make it difficult for new firms to enter the market, creating a natural monopoly. One firm may be able to operate more efficiently than two firms and pass on those benefits to consumers. B) There are other forms of radio broadcasts available, so consumers may be able to substitute away from satellite radio if prices increase. C) The merged firm may be able to operate at higher capacity and reduce costs through learning-by-doing, which can benefit consumers through lower prices. Hence, all three statements are plausible reasons for the limited impact of the proposed merger.

There Are Two Satellite Radio Providers in the U