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A monopoly produced through vertical integration is called a vertical monopoly: vertical in a supply chain measures a firm's distance from the final consumers; for example, a firm that sells directly to the consumers has a vertical position of 0, a firm that supplies to this firm has a vertical position of 1, and so on. [2]
Gasoline production provides another example of supply restraints and competitive dominance by means of vertical integration. Market foreclosure plays a consistent role in the dynamics of the gasoline industry and more specifically with large refineries with significant capabilities of production. Researchers have estimated that US wholesale ...
Vertical integration: In the case of double marginalization, both firms within the same supply chain are increasing their prices beyond their marginal costs which create deadweight losses. By vertically integrating, these deadweight losses will be eliminated and the vertically integrated company can incorporate a pricing strategy that is ...
As in classical economics, supply-side economics proposed that production or supply is the key to economic prosperity and that consumption or demand is merely a secondary consequence. Early on, this idea had been summarized in Say's law of markets , which states: "A product is no sooner created, than it, from that instant, affords a market for ...
It first appeared as a central component of macroeconomic theory as it was taught by Paul Samuelson in his textbook, Economics: An Introductory Analysis. The Keynesian cross plots aggregate income (labelled as Y on the horizontal axis) and planned total spending or aggregate expenditure (labelled as AD on the vertical axis). [1]
A pivotal element contributing to China's success are "supply-chain cities" that enabled China to realize both economies of scale and scope within GVCs. Chapter 8 develops a framework for analyzing the linkages between the economic upgrading of firms and the social upgrading of workers.
The value-chain concept has been extended beyond individual firms. It can apply to whole supply chains and distribution networks. The delivery of a mix of products (goods and services) to the end customer will mobilize different economic factors, each managing its own value chain. The industry wide synchronized interactions of those local value ...
The prototypical keiretsu appeared during the Japanese economic miracle which followed World War II, amid the dissolution of family-controlled vertical monopolies called zaibatsu. The zaibatsu had been at the heart of economic and industrial activity within the Empire of Japan since Japanese industrialization accelerated during the Meiji era. [3]