If there are only a few producers of substitutes for Good X, a merger between producers of Good X and any one of them could significantly _____ for Good X.

Question

Quizplus · Accepted Answer

A merger between producers of Good X and a producer of its substitutes would likely decrease the number of available alternatives for consumers, making them less responsive to price changes. This would decrease the elasticity of demand, as consumers would have fewer substitute goods to switch to in response to price changes of Good X.

If There Are Only a Few Producers of Substitutes for Good