competition in these markets.

The U.S. government approves most proposed mergers. In a market-oriented economy, firms have the freedom

to make their own choices. Private firms generally have the freedom to:

• expand or reduce production

• set the price they choose

• open new factories or sales facilities or close them

• hire workers or to lay them off

• start selling new products or stop selling existing ones

If the owners want to acquire a firm or be acquired, or to merge with another firm, this decision is just one of

many that firms are free to make. In these conditions, the managers of private firms will sometimes make

mistakes. They may close down a factory which, it later turns out, would have been profitable. They may start

selling a product that ends up losing money. A merger between two companies can sometimes lead to a clash
262 11 • Monopoly and Antitrust Policy
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