Sept27 - 18:34 (18791893 HorizontalMerger o o o

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18:34 The Horizontal Merger Wave (1879-1893) Horizontal Merger o Combination of firms that produce similar or identical products o Tends to reduce competition in market for the product Concentrated in consumer goods industry o Urbanization led to increased income - Normal goods – increased income  led to increased demand o Firms responded by investing in capital, expanding mass production  facilities and increasing capacity o Sugar, whiskey, salt, leather, rubber boots, etc o o Consolidation allowed for efficient production/econs of scale o Supply rose and outpaced rising demand and firms were left w/ excess  capacity and falling prices Firms had expanded such that they had the capacity to produce Q capacity;  however, limited market D and the presence of many similar firms forced the  firm to produce at Q (higher LRAC) > excess capacity.
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This note was uploaded on 10/05/2010 for the course FIN 3000 taught by Professor Ackute during the Spring '10 term at Kennesaw.

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Sept27 - 18:34 (18791893 HorizontalMerger o o o

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