Vertical integration toward an export-oriented industry
Journal
Japanese Economic Review
Journal Volume
63
Journal Issue
2
Pages
280-286
Date Issued
2012
Author(s)
Chen, Chin-Sheng
Abstract
The literature on vertical integration has constantly assumed a linear demand for the final good market. In this paper, we instead assume the demand to be a general one and use it to derive the welfare effect of vertical integration toward an export-oriented industry. It is shown that the effect of vertical integration on the intermediate good price depends on the curvature of the derived demand curve. Moreover, vertical integration is welfare-improving only if it increases the price of the intermediate good. © 2012 Japanese Economic Association.
Type
journal article