Vertical Integration Boosts Profits, But Risks Anticompetitive Practices
The article investigates why companies decide to combine different parts of their businesses (like production and sales). By using game theory and technology tools, the study looks at the reasons for vertical integration and its effects on competition and profits. The findings reveal that companies may integrate to gain benefits or to avoid problems caused by other companies' actions. This integration can either help or harm competition, depending on how it's done. When companies join together vertically, it often boosts profits for suppliers. Also, the more efficient a company is after integrating its operations, the more it can benefit society as a whole.