Forward integration

Updated: Aug 20, 2021

The inclusion in the same firm of ‘downstream’ activities which use or distribute the products of an ‘upstream’ activity. An example of this is the ownership of filling stations by oil companies. Forward integration may be adopted to improve efficiency by better coordination of the different levels of production, or to exploit monopolistic advantages at one level to reduce competition at another.

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

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