Question: Based on the case study Staples and Office Depot Again Propose a Merger. Please point out what you would liked about this analysis and do you agree or disagree with it? In paragraph form. Below is the case study link.

The office superstore industry can be categorized as an oligopolistic market with three main competitors. The office superstore sector has been consolidating recently and is very competitive. Two of the largest vendors are Office Depot and Staples. The largest office superstore in the nation would be created as a result of the planned merger between Staples and Office Depot. About 70% of the market is shared by the two businesses collectively. Given that the combined company would have more market share and less competition, the merger may result in higher prices for consumers. Both companies dominate the B-to-B market and are each other's closest competitors.

The market has changed significantly since Staples and Office Depot originally attempted to merge. More small players have entered the market over the years which has led to more business in the market.There are several entry barriers that help to keep the industry structure in place. The first is that there are a lot of small players in the office supply retail market, which is highly fragmented. This makes new entrants into the market difficult. The second reason is that the market requires a lot of capital, so new businesses would have to invest heavily to compete. The industry is additionally impacted by economies of scale, which allows the bigger businesses to run more successfully and provide lower prices.

An industry-wide monopoly would be established in the retail office supplies sector as a result of the proposed merger between Staples and Office Depot. Due to the combined company's substantial market power, prices could be set much higher than they could in a market that is highly competitive. This would be because the company wouldn't need to worry as much about the competition and could set higher prices without worrying about losing customers to rival retailers. Since there would be fewer options available to customers and they would be less inclined to move to another seller even if prices increased, the merged firm's own price elasticity in this industry would subsequently become more inelastic over time.

The market should include merchants who sell office supplies but are not industry specialists. This is so that they can offer customers a wider range of choices and prices, which can result in more competition and lower prices. Some people disagree, however, and think that because these merchants lack the same knowledge and experience or familiarity with office supplies, they are not a part of the market. The squares of all the firms' market shares within an industry are added up to create the Herfindahl-Hirschman Index (HHI), which is a gauge of industry concentration. The HHI will typically rise as a result of a merger between two companies because the combined company will have a larger market share and a greater effect on the concentration of the industry. Since the Herfindahl-Hirschman Index (HHI) would be impacted by the merger, concerns about higher prices have been raised about the proposed merger between Staples and Office Depot. Consumers would gain from increased efficiency and cost savings, according to Staples and Office Depot, who have argued in favor of the proposed merger. They have additionally argued that the combination would forge a more formidable rival to online merchants like Amazon. Critics have, however, expressed concern that the merger may result in higher consumer prices.

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