Assume firm X is one of the three largest firms in an oligopolistic industry.Firm X is currently considering a vertical merger with another firm that is the sole supplier of an input used by all of the firms that compete with firm X.If the merger goes through,firm X would be able to operate much like:

Question

Quizplus · Accepted Answer

If the merger goes through and firm X becomes the sole supplier of the input, it would have a high degree of market power and would be able to behave like a monopolist in setting prices and output levels. Therefore, the best choice is D.

Assume Firm X Is One of the Three Largest Firms