A horizontal merger can lead to all of the following except which one?
A)a decrease in the total surplus
B)a monopoly
C)a perfectly competitive market
D)a deadweight loss

Question

Quizplus · Accepted Answer

A horizontal merger involves the consolidation of two firms in the same industry. This can lead to a decrease in competition and an increase in market power, potentially leading to a monopoly. It can also result in a deadweight loss if the merged firm raises prices and reduces output. However, it is unlikely to result in a perfectly competitive market, as the consolidation of firms reduces the number of competitors in the market. Therefore, choice C is the correct answer as it is not a possible outcome of a horizontal merger.

A Horizontal Merger Can Lead to All of the Following