Vertical Integration and Multi-Plant Operation: Evidence from Korea’s Concrete Industry
Vertical Integration and Multi-Plant Operation: Evidence from Korea’s 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.

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