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An empirical evaluation of factors determining vertical integration in U.S. food manufacturing industries

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  • Sanjib Bhuyan

    (Department of Agricultural, Food & Resource Economics, Rutgers University, 55 Dudley Road, New Brunswick, NJ 08901-8520)

Abstract

Vertical integration has become an important business strategy among food manufacturers because it allows them to manage and customize their production according to consumer needs. Economic theory has shown that vertical integration may be induced by transaction costs, demand variability, market power motives, and other factors. This paper presents an index of forward vertical integration for U.S. food manufacturing industries and uses an econometric analysis to examine the factors that motivate vertical integration in these industries. Empirical results indicate the role of both transaction cost factors and potential monopoly motives. [JEL Classification: L13, Q13.] © 2005 Wiley Periodicals, Inc. Agribusiness 21: 429-445, 2005.

Suggested Citation

  • Sanjib Bhuyan, 2005. "An empirical evaluation of factors determining vertical integration in U.S. food manufacturing industries," Agribusiness, John Wiley & Sons, Ltd., vol. 21(3), pages 429-445.
    • Handle: RePEc:wly:agribz:v:21:y:2005:i:3:p:429-445
    DOI: 10.1002/agr.20056
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    References listed on IDEAS

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    Cited by:

    1. Jason R.V. Franken & Joost M.E. Pennings & Philip Garcia, 2018. "Graphical Illustration of Interaction Effects in Binary Choice Models: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 852-858, September.
    2. Acosta, Manuel & Coronado, Daniel & Romero, Carlos, 2015. "Linking public support, R&D, innovation and productivity: New evidence from the Spanish food industry," Food Policy, Elsevier, vol. 57(C), pages 50-61.
    3. Chao-Chien Chen & Hsiu-Ping Yueh & Chaoyun Liang, 2016. "Strategic Management of Agribusiness: Determinants and Trends," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 12(4), pages 69-97.
    4. Jaroslav KITA & Katarína MÁZIKOVÁ & Marta GROSSMANOVÁ & Pavol KITA, 2012. "Trade practices of retail chains as far as the transaction cost analysis in relationships manufacturer - retailer are concerned in the milk industry," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(6), pages 264-274.
    5. Marta Fernández-Olmos & Jorge Rosell-Martínez & Manuel A. Espitia-Escuer, 2009. "Vertical integration in the wine industry: a transaction costs analysis on the Rioja DOCa," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 231-250.
    6. Wandel, Jürgen, 2011. "Integrierte Strukturen im Agrar- und Ernährungssektor Russlands: Entstehungsgründe, Funktionsweise, Entwicklungsperspektiven und volkswirtschaftliche Auswirkungen. Band I und II," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 63, number 63.
    7. Bahlmann, Jan & Spiller, Achim, 2008. "The Relationship between Supply Chain Coordination and Quality Assurance Systems: A Case Study Approach on the German Meat Sector," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria 49768, European Association of Agricultural Economists.
    8. Declerck, Francis, 2005. "Typology and Financial Performance of Champagne Makers According to Distribution Channel," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 8(4), pages 1-22.
    9. Blank, Steven C. & Volpe, Richard J. III & Erickson, Kenneth W., 2008. "The relationship between industry structure and production contracting: raising questions at the beginning of a trend," 2008 Annual Meeting, June 23-24, 2008, Big Sky, Montana 291743, Western Agricultural Economics Association.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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