merger of companies that have a similar range of activity in marketing and production in order to gain more control in that range
In
microeconomics and managing management, the term vertical integration describes a style of
ownership and control. The degree to which a firm owns its upstream suppliers and its downstream buyers determines how vertically integrated it is. Vertically integrated companies are united through a
hierarchy and share a common owner. Usually each member of the hierarchy produces a different
product or service, and the products combine to satisfy a common
need. It is contrasted with
horizontal integration. Vertical integration is one method of avoiding the
hold-up problem. A
monopoly produced through vertical integration is called a
vertical monopoly, although it might be more appropriate to speak of this as some form of
cartel.
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