Suppose that the two lacrosse leagues merge into one monopoly league. The merger generates an increase in demand through a switch to a tour-based model (as opposed to a hometown-based model), so demand for lacrosse teams increases to
P (Q) = 360 − 3Q
The merger does not affect the marginal cost MC = 48.
a) Find the market price and the market quantity.
b) Find total profits in the market and consumer surplus.
c) If the antitrust authority only cares about consumer surplus, will they allow or block the merger?
d) If the antitrust authority only cares about total surplus, will they allow or block the merger?