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Does Vertical Integration Effect Market Power? Evidence from U.S. Food Manufacturing Industries

Published online by Cambridge University Press:  28 April 2005

Sanjib Bhuyan
Sanjib Bhuyan*
Affiliation:
Department of Agricultural, Food & Resource Economics, Rutgers University, New Brunswick, NJ
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Abstract

The issue of whether vertical integration can raise market power is hotly debated because firms have a market power-related incentive to integrate vertically. Using a sample of U.S. food manufacturing industries, this “market power” motive is empirically tested in this study. Empirical analysis shows that forward vertical ownership integration (or vertical mergers) did not increase food manufacturers' market power in the final product market. The study, however, shows that both market structure and conduct significantly influenced market power in the food industries.

Keywords

food industriesmarket powervertical integrationvertical mergerL13L22Q13
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 37 , Issue 1 , April 2005 , pp. 263 - 276
Copyright
Copyright © Southern Agricultural Economics Association 2005

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