Justice Department Seeks to Enjoin Merger Between WorldCom and Sprint Corporation: Questions
Read the WorldCom Case Study document and answer the specific questions of the case in no less than 200 to 300 words. please incorporate the economic principles discussed throughout this course for the each question below.
1. Summarize the Case (20 points)
2. What are the relevant product markets? How concentrated is each market, and who are the competitors? What are the barriers to entry for each market? 100%. Entry is difficult for the same reasons as for international long distance services. (20 points)
3. What are the barriers to entry in this market? How difficult are these barriers to overcome? (20 points)
4. Are marginal costs high or low in this industry? What does this indicate about the market power of the firms? (20 points)
5. In addition to approving (or opposing) the merger, what role does government regulation play in this industry? (20 points)