Vertical Integration and Concentration in US Agriculture
Vertical integration is the process whereby one firm merges with another firm from which it buys inputs or to which it sells output. Concentration reflects the degree of horizontal integration and defines the extent to which a firm has competitors. The food system in the United States has become increasingly integrated and concentrated during the last 100 years. Economists have long argued that economic factors – most notably economic efficiency – largely explain the increase in vertical integration and concentration in the agrifood industry (MacDonald et al. 2004), but others implicate the exercise of market power and changes in antitrust policy enforcement as explanations (Carstensen 2008; Hendrickson and Heffernan 2002). Concentration and integration (hereafter simply “consolidation”) in the food system raise a number of important ethical issues for farmers, agribusiness firms, and consumers. These ethical issues...
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