Cost Structure and Vertical Integration between Farming and Processing
研究了农牧加工环节成本曲线变陡如何推动纵向一体化，通过重复博弈模型说明陡峭的平均成本曲线使加工商更易受供应商机会主义行为影响，从而促进一体化。
Abstract In several food‐producing sectors, we observe vertical integration between the farming and processing stages. The salmon industry, which has motivated this paper, has seen a rise in large vertically integrated companies over the last decade, with direct ownership of production activities including hatcheries, fish processing and exporting. Both the farming and processing stages have become more capital intensive, which has led to a steeper U‐shaped average cost (AC) curve. In this paper we present a theoretical link between this technological shift and vertical integration: in a repeated game model of relational contracting, we show that when the AC curve is sufficiently steep, then processors and farmers are more likely to vertically integrate. The reason is that steep AC curves make it costly to deviate from the optimal production scale, which in turn makes processors more vulnerable to hold‐up and opportunistic behaviours from its suppliers.