Difference between revisions of "Vertical integration"
Jump to navigation
Jump to search
m (full name) |
|||
| Line 1: | Line 1: | ||
{{corporations}} | {{corporations}} | ||
| − | '''Vertical integration''' is the process by which a [[corporation]] acquires related businesses in a [[supply chain]]. For example, a [[steel]] mill may acquire a smelter, a mining corporation, and a [[transport]] network. This process is also referred to as "internalization"; the famous [[economist]] Coase theorized that, ideally, a firm would internalize all possible functions, until the [[transaction cost]] of internalizing outstripped the transaction cost of doing business with an unaffiliated firm. | + | '''Vertical integration''' is the process by which a [[corporation]] acquires related businesses in a [[supply chain]]. For example, a [[steel]] mill may acquire a smelter, a mining corporation, and a [[transport]] network. This process is also referred to as "internalization"; the famous [[economist]] [[Ronald Coase]] theorized that, ideally, a firm would internalize all possible functions, until the [[transaction cost]] of internalizing outstripped the transaction cost of doing business with an unaffiliated firm. |
[[category:economics]] | [[category:economics]] | ||
Revision as of 03:55, January 17, 2008
| Part of the series on |
| Corporations |
| Corporate Players |
| Business Forms |
|
Sole Proprietorship |
| Economic Concepts |
|
Agency Cost |
Vertical integration is the process by which a corporation acquires related businesses in a supply chain. For example, a steel mill may acquire a smelter, a mining corporation, and a transport network. This process is also referred to as "internalization"; the famous economist Ronald Coase theorized that, ideally, a firm would internalize all possible functions, until the transaction cost of internalizing outstripped the transaction cost of doing business with an unaffiliated firm.