Assume that the industry you wrote about in Assignment 1 wants to expand and that its only option is...

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Assume that the industry you wrote about in Assignment 1 wants to expand and that its only option is a merger. Now the industry is confronted with government regulations to oversee the merger. Write a four to five (4–5) page paper in which you:

1. Explain why government regulation is needed, citing the major reasons for government Involvement in a market economy.

2. Justify the rationale for the intervention of government in the market process in the U.S.

3. Assuming that the merger faces some threats and that the industry decides on self-expansion as an alternative strategy, describe the additional complexities that would arise under this new scenario of expansion via capital projects.

4. Analyze how the different forces will come together to create a convergence between the interests of stockholders and managers.

5. Speculate about the implications for the goals of the firm as to whether to maximize the industry’s profits or to create more value for the shareholders.

6. Use at least three (3) high-quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources. Your assignment must follow these formatting requirements: • Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions

David · Accepted Answer

Mergers and Acquisitions                                                                                                       1
                                       Mergers and Acquisitions: 
                       A general overview in a market economy
Mergers and Acquisitions                                                                                                       2
Role of Government in a Market Oriented Economy 
Government intervention in any type of market economy would be is directed to promote 
Pareto optimality. This is done by: ensuring that all market agents have equal access to all 
possible information about market factors at any point of time; Government intervention in a 
market with externalities through taxation, subsidy or other methods will lead to optimal 
allocation of resources. The government is the provider of public goods in any economy. By 
public goods we mean the goods and services like roads and bridges, street lamps, defense, 
lighthouses, information goods, environmental goods etc. The government also aims to check 
any rise of noncompetitive forces and finally it engages through planned programs to control 
unequal income distribution of income, poverty, unemployment and other social problems. The 
last example of government intervention is basically to promote the wellbeing and prosperity of 
the people. Such interventions will ensure that the market allocation is not just pareto optimal but 
also, in some way, equitable.
In general merger agreements between organizations have been looked upon with 
suspicion by the government as well as other stakeholders. Mergers and acquisitions sometimes 
may lead building up of market share in the hands of few market players. In other words it adds 
to the monopoly powers of the big players while the small ones become vulnerable and face a 
threat to survival. Governments across nations have passed various laws to check mergers and 
acquisitions as competitive forces will lead to more desirable market equilibrium. They are 
referred to as the antitrust laws or the competition laws. They more or less aim at checking the 
formation of monopolies or any other type of illegal cooperation through cartels or mergers 
which have become one of the most significant business strategy of the big market payers in the 
Mergers and Acquisitions                                                                                                       3
capital intensive industries in recent times. The Swedish Competition Act, passed in 1993, aims 
at pacifying the effect of forces threatening healthy competition in the market. This is similar to 
the Mexican laws. 
Rationale behind Merger laws (MLs) in the U.S. 
 There is a dire need of government regulation in case of market economies like the U.

Assume that the industry you wrote about in Assignment 1 wants to expand and that its only option is a merger. Now the industry is confronted with government regulations to oversee the merger. Write a...

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