1. Network Economies. In some industries, companies are better of developing an international network. By developing this type of network the company creates a substantial Economy of scale. An International network may indicate the most efficient number of firms in the industry is one. For example, when Burger King merged with Tim Horton’s in Canada, they vindicated the merger on the belief that:
"By bringing together our two iconic companies under common ownership, we are creating a global QSR powerhouse. Our combined size, international footprint and industry-leading growth trajectory will deliver superb value and opportunity for both Burger King and Tim Horton’s shareholders, our dedicated employees, strong franchisees, and partners. We have great respect for the Tim Horton’s team and look forward to working together to realize the full potential of these two extraordinary businesses," (Burger King World Wide, 2014.)
2. Tax Inversions: By moving Burger kings headquarters to Canada, they are able to deal with a lower amount of corporate taxes.
3. Regulation of Monopoly: Even if a firm gains monopoly power from a merger, it doesn’t have to lead to higher prices if it is sufficiently regulated by the government. For example, in some industries the government have price controls to limit price increases. That enables firms to benefit from economies of scale, but consumers do not face monopoly prices(Pettinger, 2012.)
Describe the firms in the proposed merger. List