Impact of Vertical Mergers on Industry Profitability: An Empirical Evaluation

Vertical integration has become an important business strategy to respond to the needs of a consumer-driven marketing system. Although one of the perceived benefits of vertical ownership integration is improved profitability of the integrated firm, empirical literature mostly ignores this issue. Usi...

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Bibliographic Details
Published inReview of industrial organization Vol. 20; no. 1; pp. 61 - 79
Main Author BHUYAN, SANJIB
Format Journal Article
LanguageEnglish
Published Boston Kluwer Academic Publishers 01.02.2002
Springer Nature B.V
Subjects
Acquisitions & mergers
Agriculture
Cost control
Economic impact
Economic theory
Efficiency
Empirical research
Estimates
Food
Food industries
Food processing industry
Industrial agriculture
Industrial economics
Industrial market
Industrial organization
Industry
Integrated agricultural systems
Manufacturers
Manufacturing
Manufacturing industries
Marketing
Meat packing industry
Mergers
Organization theory
Poultry
Profitability
Profitability index
Profits
Studies
Vertical integration
Vertical markets
Vertical mergers
United States > US
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Summary:Vertical integration has become an important business strategy to respond to the needs of a consumer-driven marketing system. Although one of the perceived benefits of vertical ownership integration is improved profitability of the integrated firm, empirical literature mostly ignores this issue. Using a sample of U.S. food manufacturing industries, this study examines the impact of vertical mergers on profitability. Findings show that vertical mergers negatively impact profits. This may be due to the failure of vertical mergers to create differential advantages, such as cost savings, for the integrated firm.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0889-938X
1573-7160
DOI:10.1023/A:1013310929902