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Why do companies merge?
Companies merge for many reason , companies merge when they are woth more together than apart.. some do to cut costs i.e in vertical integration when a corp. merges with either its supplier or consumer .. others merge for growth and market power and to eliminate competition.. these mainly merge with their competitors to create more power in the markets i.e AT&T and Bell South both are Telecom companies. its not the best idea, but actually some companies merge to diversify, like acquiring another company in a seemingly unrelated industry in order to reduce the impact of a particular industry's performance on its profitability.
What is monetary union?
Monetary Union is where 2 or more countries, using different currencies merge their currencies. They may create a new currency, as they did in 1999 with the creation of the Euro.
What happens with free enterprise?
Not very well. The essence of the free enterprise system is that different entrepreneurs will compete on a level playing field and that the customer will select the business that is providing the best product and service and that business will succeed . . . until another competitor comes along. It doesn't work in the US because of a number of factors which inhibit competition and tend toward monopolies: 1. Larger corporations are given tax breaks by the government which smaller ones do not get and so the smaller ones cannot compete. 2. Larger corporations are able to use the economics of scale to swallow up potential competitors. They can undercut prices and drive small businesses bankrupt, or force them to merge because the big corporations have much larger reserves of money. 3. Larger corporations are able to bribe politicians (this is called lobbying) into passing laws which accomodate the larger corporations' agendas, thus enabling them to become larger and more powerful. 4. Finally, the idea that unsuccessful businesses fail, a cornerstone of free enterprise, does not apply to large businesses which are considered "too big to fail" and which are given government bailout money no matter how ineptly they are administered. In other words the US economy is resembling more and more the economy of Soviet Russia, except that instead of inefficient monopolistic industries being run by the government, they are running the government.
How did trust and mergers hurt competition?
Trust and mergers hurt competition because they help create monopolies. When two companies merge, they are no longer competitive with each other and have a size advantage over companies that were formerly competing with both of them.
Why are the lines between the categories of financial firms becoming more blurred than in the past?
because banks, thrifts, pension companies, insurance companies, and security firms can now merge with one another and sell each other's products
