Backward integration

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Updated: Aug 20, 2021

The expansion of a firm’s activities to include the production of inputs formerly bought in from outside. Examples include a firm manufacturing its own components, mining its own mineral requirements, generating its own power supplies, or even growing food for its own works canteen. Backward integration may be pursued to improve the quality or reliability of inputs, or to increase a firm’s monopoly power by denying access to inputs to actual or potential rivals.

Reference: Oxford Press Dictonary of Economics, 5th edt.



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