Question

What is a vertical merger?

Answer 1

A vertical merger is the combination of two or more firms involved in different stages of producing the same good or service.

Answer 2

The correct answer is A.

A vertical merger ( or vertical integration ) is a merger between a manufacturer and a supplier.

It is a merger between two or more companies that produce separate services or components along the value chain for some final product.

This merger happens when the involved companies want to reduce production costs and increase efficiency for higher profits.

The companies involved purchase suppliers to control the entire production cycle and to control the production of individual components.