Chapter 20, Problem 4DQ

Summary Introduction

To explain: The difference between vertical and horizontal integrations and the effect of the anti-trust policy on mergers.

Introduction:

Vertical integration:

A vertical integration is one in which the acquirement of firms with the same production process within the same industry is done.

Horizontal integration:

A horizontal integration is one in which the acquirement of firms with the same level of value chain in an industry is done.

Anti-trust policy:

Anti-trust laws are statues of the U.S. to ensure the prevention of consumer exploitation by implementing healthy competition in an open-market economy.