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vertical integration |
Also found in: Financial, Wikipedia | 0.02 sec. |
vertical integrationForm of business organization in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company. A current example is the oil industry, in which a single firm commonly owns the oil wells, refines the oil, and sells gasoline at roadside stations. In horizontal integration, by contrast, a company attempts to control a single stage of production or a single industry completely, which lets it take advantage of economies of scale but results in reduced competition. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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a vertically integrated forest products company based in Antigo, WI, announced July 18 the acquisition of Sacramento, CA-based Hughes Hardwoods. As industries have transitioned to the networked structures, the results have shown significant advantage over the slower, more cumbersome vertically integrated competitors: The intuition for this latter finding is that the upstream firm's profit maximizing two-part tariff contract suffices to control perfectly the number of retailers and the retail price, yielding the same profit as would be earned by a vertically integrated firm. |
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