Which of the following is not a reason to allow a horizontal merger? a. The merger...
Which of the following is not a reason to allow a horizontal merger?
| a. | The merger would create an oligopoly | b. | Increased efficiency |
|---|---|---|---|
| c. | Strong international competition | d. | One firm is in danger of failing |
Homework Answers
Answer: d
This type of merger takes place within the same industry among the competitive firms. Sometimes this is required for oligopolistic behaviour, competing internationally, and/or increasing efficiency. But in horizontal merger, weaker firm basically not entertained, since it can’t make strengthen the merged firm. Therefore, the firm in danger should not be picked for merger.
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