Cost Savings from a Merger. Consider the following statement from a firm that has proposed a merger between two companies: “The two companies could save about $50 million per year by combining our...

Cost Savings from a Merger. Consider the following statement from a firm that has proposed a merger between two companies: “The two companies could save about $50 million per year by combining our production, marketing, and administrative operations. In other words, we could realize substantial economies of scale. Therefore, the government should allow the merger.” In light of the new guidelines concerning mergers, how would you react to this statement?