There is also concern that the government may incur a higher cost in paying for unemployment benefits which necessitates it regulations in mergers.
Provision of market activity
Other than the above two likely reasons for government involvement, the government may have non-economic reasons. Such activities include the national security which is a public good which is related to welfare. The government intervene in market activities so that they can provide welfare commodities and products that otherwise cannot be provided for under the market mechanism. The provision of public goods such as defense and security is only possible through government interventions. Government regulations and interventions ensure that society does not miss production of welfare commodities that the market cannot produce.
Cultural Identity Promotion
This includes aspects such as sustaining productive capacity, producing for the future and sustaining the population. This is mainly the case such as maintaining Oil reserves and grains for consumption. Where the market is left to manage and provide for the economy, there is bound to be deficiency where storage for future is needed. The government steps in to undertake this activity since it has no economic profit to undertake. The objective sought in this instance is to preserve the national culture and safe guard the interest of the community.
Correction of government activities
Where the regulatory body has undertaken an activity that has led to undesirable result far from optimal corrective measures are necessary. This argument may not be considered worthy especially by those who are against government involvement in market activities. With government intervention being subjected to reactions from other economic institutions, failure is inevitable....
The government will thus need to re-intervene to correct what it had done and suit it to the ideal circumstances. Example where a government seeks to provide health care to all but ends to provide health care to people affected by unhealthy habits such as smoking. The government will re-intervene by ensuring it taxes appropriately those causing the illness and there by internalizing the cost.
Threat to mergers where a self-expansion strategy is opted
Where companies expect to merge a lot of information is exposed to the public. Ideally the companies are required to open up their company for scrutiny. This implies that he companies are at risk of competition from other companies based on the information in public. Upon failure of a merger this is bound to happen even within the intending to merge corporations. The company will be at risk in regards to counter reactions to opponent's activities. The will also suffer reduced loyalty from customers since they are not sure of the company's well being. The corporations will be faced with little or no confidence in the market and should expansionary strategy be undertaken by competing companies then more danger of failure may be embraced. Lack of dedication of employees owing to the previously looming danger of job loss this will cause lack of motivation and high labor turnover.
References
Deardorff, Alan V., & Jackson, J.H. (1993). "Problems of Regulating Economic Activity in a World of Increasing Interdependence, . New York: Cambridge University Press.
Ginsburg, Martin D., & Levin, J.S. (1989). Mergers, Acquisitions and Leveraged Buyouts. Commerce Clearing House.
Marks, & Lee., M. (2003). Charging Back up the Hill: Workplace Recovery after Mergers, Acquisitions, and Down-sizings. San Francisco: Jossey-Bass.
