What type of integration occurs when a business combines with another at the same stage of production?

Horizontal integration occurs when a business combines with another firm that operates at the same stage of production. This strategy is often employed to increase market share, reduce competition, achieve economies of scale, and enhance trading power over suppliers and customers. By merging with or acquiring a competitor that offers similar products or services, a business can consolidate its resources and market presence, leading to greater efficiency and improved profitability.

In contrast, backward vertical integration involves a company acquiring or merging with suppliers to gain control over the supply chain, while forward vertical integration involves moving forward in the production process to take control of distribution or retailing. Diagonal integration refers to a combination of businesses at different stages of production in different industries, which does not fit the context of combining at the same production stage. Therefore, horizontal integration is the correct answer as it specifically addresses the merging of businesses at the same level of production.