What is the term for a type of monopoly where a single company buys out all of its competition?

What is the term for a type of monopoly where a single company buys out all of its competition?

• A. Vertical Integration
• B. Horizontal Integration
• C. Monopoly by Acquisition
• D. Market Consolidation

Answer: (B)

Gaining market power by absorbing rivals in the same industry is horizontal integration. This move expands a company’s footprint at the same level of the supply chain, reducing competition and boosting market share, which can lead toward a monopoly. If the company were buying suppliers or distributors instead—different stages of production—that would be vertical integration, which changes control across the supply chain rather than the competitive landscape. While “monopoly by acquisition” describes the outcome, the standard term for the strategy is horizontal integration. Market consolidation describes the broader outcome of increased concentration but doesn’t specify the exact strategic action.

Gaining market power by absorbing rivals in the same industry is horizontal integration. This move expands a company’s footprint at the same level of the supply chain, reducing competition and boosting market share, which can lead toward a monopoly. If the company were buying suppliers or distributors instead—different stages of production—that would be vertical integration, which changes control across the supply chain rather than the competitive landscape. While “monopoly by acquisition” describes the outcome, the standard term for the strategy is horizontal integration. Market consolidation describes the broader outcome of increased concentration but doesn’t specify the exact strategic action.