In this paper , a game model that studies the formation choices of horizontal industrial group is devel2 oped. In the model , there are three firms ; two of them produce a homogeneous product , and the other produces an interrelated product . There are two periods. In period one , the firms that produce a homogeneous product select a strategy : to form a group or not . In period two , three firms play Cournot2Nash competition. Cournot2Nash equilibri2 um outcomes is reached when no group is formed and the effects of substitutability coefficient on optimal outputs is studied.Different Cournot2Nash equilibriumoutcomes can be got when a group is formed. The paper also studied the formation choices of horizontal industrial group , and a numberical sample is given.