The article explores how competition between companies in different parts of a supply chain affects their profits and decisions to merge. When downstream firms compete more, the upstream company gets a bigger share of the profit but from a smaller market. The upstream company might even encourage more competition among downstream firms if they have a lot of power. Vertical integration can make it harder for new companies to enter the market and could lead to mergers or spinoffs. The study also looks at how competition between upstream companies plays out.