When Hewlett Packard and Compaq merged,the combined firm was larger and therefore could negotiate lower prices from suppliers.This benefit of horizontal integration is called
A) economies of scale.
B) reduction of excess capacity.
C) cross-selling.
D) product bundling.
E) market power.

Question

Quizplus · Accepted Answer

Market power is the ability of a firm to influence the price of a product or service in its favor. When Hewlett Packard and Compaq merged, the combined firm was larger and therefore could negotiate lower prices from suppliers. This is because the combined firm had more market power than either firm did individually.

When Hewlett Packard and Compaq Merged,the Combined Firm Was Larger