Read George Hay's document entitled: "The 1996 ACCC Revised Merger Guidelines." This document describes the principles used in Australia to evaluate whether a merger would be allowed.

1. Use the discussion in your text to explain why some mergers would not be allowed. In particular, explain why some mergers might result in economic inefficiency.
2. In the section of this article dealing with "Market Definition," the author talks about both "demand-side substitution" and "supply-side substitution" as antidotes to the exercise of market power. Explain what is meant by each type of substitution and why each type of substitution would limit a firm's market power.
3. Why might a high level of sunk costs serve as a barrier to entry?