Question

How did horizontal integration limit competition?

A. Fewer independently owned companies existed to compete.

B. Companies agreed not to compete, so they all made more money.

C. More small companies tried to supply raw materials to large companies.

D.Suppliers could not produce enough to serve horizontally integrated companies.

PLEASE HELP

Answer 1

Probably (A). Horizontal integration, which is when a business merges with similar interests within its field of expertise, can grow into a monopoly which can severely limit competition. Vertical integration is when a business merges with companies that indirectly relate to its field.

For example, Huge Car Repair can begin buying up other car repair shops in the area soon becoming the only place where you can get your car fixed. That's horizontal integration which can become a horizontal monopoly setting prices for their services with little need to compete because they bought out everyone.

But if Huge Car Repair also decides to buy a tire shop and an accessories store, that's vertical integration. A tire shop may not be related to fixing your car, but it's related to cars in general.