Which of the following is true regarding the government and horizontal integration?Multiple choice question.Large horizontal integration activity typically needs to be approved by government authorities.Governments pay a great deal of attention to vertical integration but very little to horizontal integration.Horizontal integration must always be approved by governmental authorities.Governments typically help facilitate horizontal integration because it helps the economy.
Question
Which of the following is true regarding the government and horizontal integration?Multiple choice question.Large horizontal integration activity typically needs to be approved by government authorities.Governments pay a great deal of attention to vertical integration but very little to horizontal integration.Horizontal integration must always be approved by governmental authorities.Governments typically help facilitate horizontal integration because it helps the economy.
Solution
The correct answer is: "Large horizontal integration activity typically needs to be approved by government authorities."
Here's why:
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Horizontal integration refers to the process of a company increasing production of goods or services at the same part of the supply chain. This strategy is used by a company to increase its market share.
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However, this can potentially lead to a monopoly, which can harm consumers by limiting competition, leading to higher prices and less innovation.
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Therefore, large horizontal integration activity typically needs to be approved by government authorities to ensure it doesn't violate antitrust laws.
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The other options are not necessarily true. Governments do pay attention to both vertical and horizontal integration, not just vertical.
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Horizontal integration doesn't always need to be approved by government authorities, it depends on the scale and potential impact on the market.
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Lastly, governments don't typically facilitate horizontal integration because it can lead to less competition in the market.
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