Why would a firm vertically integrate?

Asked by John McDaid on March 28th, 2012 @ 7:39 a.m.
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Firms would vertically integrate in order to squeeze out certain benefits, including:

* lower transaction costs between layers, which creates better business economics
* better coordination between layers: this is especially important for firms like American Apparel, who claim that they are able to change and manufacture designs more quickly due to better coordination
* strategic independence: some companies may want to retain control in order to prevent information leakage or a certain independence from market forces, competition, etc.
Answered by Tak Lo on April 8th, 2012 @ 12:14 p.m.