Week 2 Discussion

What are they? What is the key difference between an economy of scale and an economy of scope? https://cdnapisec.kaltura.com/index.php/extwidget/preview/partner_id/956951/uiconf_id/38285871/entry_id/1_e6f88crm/embed/dynamic

One source of growth is external growth from a merger and/or acquisition. Often merger/acquisition are justified on the basis of the expected benefits from ‘synergies’ created by the merger/acquisition. Economists know these as economies of scale and economies of scope.

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Select one of the below mergers and acquisitions and determine if the synergies come from economies of scope or economies of scale. Make sure you provide a clear explanation of the difference between economies of scope and economies of scale. The link above is to some help provided by Dr Cruceru.
a) Sirius XM acquires Pandora;
b) the yet to be concluded merger of Sprint, T-Mobile and Metro PCS;

c) the merger of Strayer University and Capella; or

d) the Renault/Nissan/Mitsubishi Alliance.
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