Why Staples and Office Depot Should Have Merged

Another reason this merger poses no threat to consumers is that manufacturers of office supplies have powerful incentives to guard against retail monopoly. Monopolists raise prices. Higher prices reduce consumer demand. If the Staples-Office Depot merger reduced competition and sales volume, manufacturers distributing through these retail outlets would lose sales. To avoid losing revenues, office-supply producers would offer discounts and other favorable deals to rival retailers in order to prevent a Staples-Office Depot monopoly.…