Live Nation and Ticketmaster to merge
Two of the largest ticket sellers in the world are hoping to amalgamate in what would become a market altering collusion as the companies would attain market dominance and monopolistic power. A monopoly occurs when a specific enterprise has adequate control over a particular item in the market to establish the terms on which other individuals shall have access to the item for consumption. Monopolies are therefore distinguished by a lack of economic competition for the good or service that they provide.The usual argument against monopoly power in markets is that existing monopolists can continue to earn abnormal (supernormal) profits at the expense of economic efficiency and the welfare of consumers. This is also the argument being made in the article about the merger of live nation and Ticketmaster. They will have the power to muscle out smaller businesses and become a global monopoly on ticket sales. They could achieve this through economies of scale. This new merger can develop economies of scale with a higher output and a lower price than what other firms can achieve due to their experience and pre-established expertise in the field. This is illustrated in the diagram below, where the monopolist is able to drive marginal costs lower in the long run, finding an equilibrium output of Q2 and pricing below the free market price.
