Discussion
The BP and Amoco merger is an example of:
(I) Cross-border merger
(II) Horizontal merger
(III) Economies of scale
Answer: C
Correct answer: I, II, and III only
All three descriptions fit. BP was British and Amoco American, making it cross-border; both were oil companies at the same stage of the industry, making it horizontal; and the stated rationale was the cost saving available from combining overlapping operations, which is economies of scale. Horizontal mergers between large firms in the same industry are precisely where scale economies are expected.
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