Horizontal competition is competition between firms of the same type, For example,
an automobile manufacturer versus another automobile manufacturer,
a plumbing supply wholesaler versus another plumbing supply wholesaler,
or one supermarket versus another.
This is the most visible and frequently discussed form of competition.
In economic theory, much of the treatment of competition deals with this horizontal type,
although it is usually referred to simply as “competition,” and often the firms involved are producers or manufacturers rather than wholesalers or retailers.
The competitive battle between the giant consumer electronics retailers Best Buy and Circuit City is a recent,
but likely to become classic,
example of horizontal competition that resulted in the demise of one of the parties.14 Both of these retailers sold similar products operated in essentially the same.
Each operated hundreds of “big box” retail stores on a national scale emphasizing high sales volumes and low prices.
But best Buy proved to be the stronger competitor,
ultimately resulting in Circuit City going out of business and closing its remaining 567 stores.