Horizontal Merger
A horizontal merger occurs when two companies at the same stage of production or in the same industry combine their operations. For example, if two competing smartphone manufacturers decide to merge, they would join forces to create a larger company. This type of merger can lead to increased market share, reduced competition, and cost savings through shared resources. However, it can also raise concerns about monopolistic practices, potentially leading to higher prices for consumers and reduced choices in the market. Regulatory authorities often review horizontal mergers to ensure they do not harm competition.
Additional Insights
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A horizontal merger occurs when two companies at the same level of the supply chain, often in the same industry, combine to form a single entity. This typically involves firms that produce similar products or services. The goal is to increase market share, reduce competition, achieve economies of scale, and enhance efficiency. For example, if two smartphone manufacturers merge, they may streamline operations and reduce costs, potentially benefiting consumers through lower prices or improved products. However, such mergers can also raise concerns about reduced competition and higher prices in the market.