Exploit the opportunity for takeover of an ill-managed firm or one that is undervalued by the market. Growth, i.e., empire-building. This cost savings must be weighed against the loss to society associated with increased market power and hence less competition. Williamson Model Evaluate the cost savings as unit cost reduction times units of output sold. Evaluate the loss to society as deadweight loss.
Diversification potentially increases market power and can impair efficiency.
Princeton University Press, 1955. Industrial Economics . Information contained herein may not be reproduced in any form without written permission.