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What Determines Vertical Mergers in U.S. Food Manufacturing Industries?

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  • Bhuyan, Sanjib

Abstract

Vertical mergers have become an important business strategy among food manufacturers because it allows them to manage and customize their production according to consumer needs. Economic theories have shown that vertical mergers may be induced by transaction costs, demand variability, and other factors. Using an input-output methodology, a measure of vertical merger is developed for U.S. food manufacturing industries and the transaction cost hypotheses tested in an attempt to examine the factors that motivate vertical mergers in the food manufacturing industries. The results are consistent with previous studies that confirm the role of transaction cost factors, such as lock-in effects in terms of asset specificity and managerial diseconomies.

Suggested Citation

  • Bhuyan, Sanjib, 2003. "What Determines Vertical Mergers in U.S. Food Manufacturing Industries?," 2003 Annual meeting, July 27-30, Montreal, Canada 22146, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea03:22146
    DOI: 10.22004/ag.econ.22146
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    References listed on IDEAS

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