Reference no: EM133750207

Problem

Assume you an economic analyst at a technology company. The company provides technology services to cable providers such as Comcast and Verizon. The services offered by the company are directly related to maintaining the communication between the cable providers and the set top boxes. Over the past 10 years consumers have cut the cord, looking for alternatives to the high price of cable TV. It is your opinion, the trend of consumers moving away from traditional cable TV and into internet streaming services will not only continue, but accelerate. Some members of the board of directors believe it is a good idea for the company to merge with a competitor in the same industry. As an economic analyst employed by the technology company, it is your job to advise management. Is the potential merger between your company and a current competitor a good idea? Use microeconomic principles and concepts to construct a detailed letter to the Board of Directors. Explain in detail the potential economic consequences of the proposed merger. Be certain to comment on declining demand in the traditional cable television market, how the proposed merger would affect the fixed and variable costs of the technology company, the long run viability of the industry.