Asked by Michelle Rebollar on Apr 25, 2024
Verified
Wine Merger
In October,2014,Vintners Global Resource's (VGR)agreed to purchase M.A.Silva.VGR is a leading manufacturer of glass bottles and packaging for wines and M.A.Silva is a manufacturer of premium natural corks.What is the expected effect of this merger on price-cost margins?
Price-cost Margins
The difference between the selling price of a product and its production cost, expressed as a percentage of the selling price.
Wine Merger
The combination of two or more wine-producing companies into a single entity, which can lead to various economic efficiencies and market advantages.
Premium Natural Corks
High-quality, naturally sourced cork material used predominantly for sealing wine bottles.
- Analyze the effects of mergers on price-cost margins and industry competition.
Verified Answer
LL
LaDrasia Lister7 days ago
Final Answer :
These two companies' products are complements for each other.A price decrease for one company would lower the cost of the final product,a bottle of wine,increasing the quantity demanded and so benefit the other.Before the merger,the second effect would not have been captured by the firm reducing prices.After the merger,it would.Therefore it is more willing to reduce prices.
Learning Objectives
- Analyze the effects of mergers on price-cost margins and industry competition.