Which of the following integration types has the potential problem of increasing the firm's market power? (b) Horizontal integration. Horizontal integration is when two or more firms merge into a single firm. This increases a firm's market power because the new firm now controls a larger portion of the market, allowing them to build more brand loyalty, which can result in them being able to charge higher prices than their competitors. This power would not exist without the merger because the firms would need to compete with each other by keeping prices low.