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.

Answer 1

A. Fewer independently owned companies existed to compete

Answer 2

The first answer is correct (A).

Vertical integration consists of companies that acquire a similar company in the same industry. That is, if a company wants to grow through horizontal integration, it will seek to increase its size by incorporating other companies and their respective assets.

If a company is incorporated, of course the market loses a company, that is, the competition decreases.

It is noteworthy that vertical integration needs to be authorized by a regulatory antitrust policy, such as the Federal Trade Commission - FTC.