Social welfare consequences are ambiguous when two or more manufacturers merge to take advantage of economies of scale.

Question

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When manufacturers merge to take advantage of economies of scale, it may increase efficiency and lower costs, potentially leading to lower prices for consumers. However, it may also reduce market competition and potentially result in higher prices for consumers in the long run. Thus, the social welfare consequences of such mergers are ambiguous and depend on various factors.

Social Welfare Consequences Are Ambiguous When Two or More Manufacturers