In December 2015, it was announced that DuPont and Dow Chemical were planning to merge. Both companies are producers of a large number of different chemical products with a wide range of appli- cations, and the companies make a number of the same chemicals.

DowDuPont (the new merged entity) announced that after the merger is complete, they plan to split into three separate public companies producing different products and focusing on the agricultural chemicals, materials science, and specialty product industries respectively.

Let's assume that the reasons for the merger and for the subsequent split can be entirely justified on a cost efficiency basis. If so, then what must be true about the production of these three types of chemicals?

1. There are economies or diseconomies of scale?
2. There are economies or diseconomies of scope?