Upstream vertical integration in the aluminum and tin industries. A comparative study of the choice between market and intrafirm coordination

Abstract

This paper explores whether Williamson's theory of vertical integration holds for the upstream stages of the aluminum and tin industries. It concludes that the structure of these industries is broadly consistent with Williamson's predictions: the higher degree of upstream vertical integration in aluminum can be explained by greater scale economies, higher barriers to entry, higher transportation costs, and greater asset specificity. Similarly, differences in vertical integration within the tin industry can be explained in terms of the same variables. © 1988.