Which of the following type of merger decreases competition?
A) A horizontal merger
B) A vertical merger
C) A cash purchase
D) A stock-for-stock exchanges

Question

Quizplus · Accepted Answer

A horizontal merger is when two companies in the same industry and at the same stage of production merge. This type of merger decreases competition because the two companies are now combined and their market power is increased. With fewer players in the market, it is easier for them to coordinate prices and output to maximize profits, leading to less competition within that industry. Vertical mergers, cash purchases, and stock-for-stock exchanges do not necessarily decrease competition.

Which of the Following Type of Merger Decreases Competition