Editing Vertical integration (section)

==Vertical expansion==
Vertical integration is often closely associated with vertical expansion which, in [[economics]], is the growth of a business enterprise through the [[Mergers and acquisitions|acquisition]] of companies that produce the intermediate goods needed by the business or help market and distribute its product. A firm may desire such expansion to secure the supplies needed by the [[business|firm]] to produce its product and the market needed to sell the product. Such expansion can become undesirable from a system-wide perspective when it becomes [[anti-competitive]] and impede free competition in an open marketplace.

The result is a more efficient business with lower costs and more profits. On the undesirable side, when vertical expansion leads toward [[monopoly|monopolistic]] control of a product or service then regulative action may be required to rectify anti-competitive behavior. Related to vertical expansion is [[lateral expansion]], which is the growth of a business enterprise through the acquisition of similar firms, in the hope of achieving [[economies of scale]].

Vertical expansion is also known as a vertical acquisition. Vertical expansion or acquisitions can also be used to increase sales and to gain market power. The acquisition of [[DirecTV]] by [[News Corporation (1980–2013)|News Corporation]] is an example of forwarding vertical expansion or acquisition. DirecTV is a [[satellite TV]] company through which News Corporation can distribute more of its media content: news, movies, and television shows. The acquisition of [[NBC]] by [[Comcast]] is an example of backward vertical integration. For example, in the United States, protecting the public from communications monopolies that can be built in this way is one of the missions of the [[Federal Communications Commission]].

Scholars' findings suggest that a reduction in inefficiencies caused by the market vertical value chains, including downstream prices or double mark-up, can be negated with vertical integration. Application in more complex environments can help firms overcome [[market failure]]s (markets with high transaction costs or assets specificities) Scholars also identified potential risks and boundaries which may occur under vertical integration. This includes the potential competitor, the enhancements to horizontal collusion, and development of barriers to entry. However, it is still debated over if vertical integration expected efficiencies can lead to competitive harm to the market. Some conclude that in many cases that the efficiencies outweigh the potential risks.<ref>{{cite web |last1=Claici |first1=Claici |last2=Basalisco |first2=Bruno |title=The economic rationale for vertical integration in the tech sector |url=https://www.copenhageneconomics.com/dyn/resources/Publication/publicationPDF/0/550/1606320780/copenhagen-economics-the-economic-rationale-for-vertical-integration-in-tech.pdf |publisher=Copenhagen Economics |access-date=1 May 2022}}</ref>