Final answer:
A merger between two firms that sell similar products and target the same customers is referred to as an oligopoly, which is characterized by a few firms dominating the market and influencing each other's market decisions.
Step-by-step explanation:
A merger of two firms that sell similar products to the same customers is a(n) oligopoly. An oligopoly arises when a small number of large firms have all or most of the sales in an industry. These firms may sell identical or similar products, and the market structure is characterized by mutual interdependence where various decisions such as output, price, and advertising depend on the decisions of the other firm(s). On one end of the competition spectrum, we have perfect competition where many firms sell identical products, and on the other extreme is a monopoly, where a single firm dominates the market without competition. Monopolistic competition finds its place between these extremes, with many firms selling similar but differentiated products.