Answer to Question #205686 in Microeconomics for vtg

Question

• Explain why firms form mergers in South Africa. •

Using examples, discuss how the competition policies are beneficial to industries (markets) in South Africa

Answer 1

The firms merge to gain a competitive advantage or larger market share. Through the merge, there is a better market network.

 The competition policies improve efficiency, stimulates growth, and improves resource allocation and quality of goods. for example, policy on deregulation. This policy prevents mergers that create monopoly thereby encouraging fair competition.

The policy of tough laws on anticompetitive behavior encourages fair competition leading to goods of high quality as efficiency is improved.