Vertical Integration and Multi-Plant Operation: Evidence from Korea’s Concrete Industry
Vertical Integration and Multi-Plant Operation: Evidence from Korea’s Concrete Industry
Author(s): Heechul MinSubject(s): Economy, National Economy, Business Economy / Management
Published by: Reprograph
Keywords: vertical integration; multi-plant operation; concrete industry;
Summary/Abstract: This study examines the effects of vertical integration on competition by studying a novel data set of Korea's concrete industry. I use the industry’s considerable increase of vertical integration in the mid-2000s to estimate the effects of ownership change on retail prices. A simple comparison suggests that vertical integration is associated with low prices. But regression analysis reveals that reduction in prices is not due to vertical integration but to large scale multi-plant operation that is often observed in vertically integrated firms. I also find some evidence that multi-plant operations reduce direct costs of production but find no support for elimination of double markups or increased utilization of capacity.
Journal: Journal of Applied Economic Sciences (JAES)
- Issue Year: XIII/2018
- Issue No: 59
- Page Range: 1143-1151
- Page Count: 9
- Language: English