The motives for horizontal mergers can be seen in the pic. What does the profit maximization: Cost saving regard?

Cost saving is one of the most common arguments for horizontal mergers. The combined size of two firms allows cost savings to be realized through a greater extend than would be possible through internal expansion. Hence, a merger delivers cost savings that is otherwise not possible! 1. Economies of scale (+) • In production, marketing etc. More effective organization: economies of scale in management. 2. Economies of scope (+) Overhead distributed on multiple plants, lower transport costs, multi-product production needed fewer shifts at the individual plant that can be used specializing in single products 3. Savings on R&D 4. Productive inefficiency and organizational slack