Editing Vertical integration (section)

==Influence factors of vertical integration==

*Technology : the probability of vertical integration between the two industries is less likely when the supply industry is more technology-intensive and the production industry is less technology-intensive. In addition, the impact of these factors is greater when inputs from the supply industry represent a large proportion of the total costs incurred by the production industry.<ref>Acemoglu, D., Griffith, R., Aghion, P., & Zilibotti, F. (2010). VERTICAL INTEGRATION AND TECHNOLOGY: THEORY AND EVIDENCE. Journal of the European Economic Association, 8(5), 989–1033, {{doi|10.1111/j.1542-4774.2010.tb00546.x}}</ref>
*Switching cost and [[product differentiation]] : based on a new insight that pricing incentive choice of a downstream producer may change by vertical integration, downstream firms are more likely to switch to a different supplier if the investment by firms in a particular relationship is low, or if the input market is similar to the spot market. In this case, vertical M&A is more likely to have a positive impact on consumers. However, if supplier switching costs are high, the impact of a vertical integration on consumers depends on the degree of downstream product differentiation. If the downstream product is significantly differentiated, vertical integration is more likely beneficial to consumers. In contrast, if the downstream products are close substitutes, vertical integration is likely to harm consumers.<ref>Chen, Y. (2001). On Vertical Mergers and Their Competitive Effects. The Rand Journal of Economics, 32(4), 667–685, {{doi|10.2307/2696387}}</ref>