• The issue of forward vertical integration has attracted a good deal of attention from researchers in several disciplines, including economics, marketing, and law. Many explanations have been offered for this phenomenon, including technological interrelationships involving economies of scale and scope (Chandler), uncertainty and risk considerations (Arrow, 1969), information externalities (Green), and strategic purposes. Blair and Kaserman (1983) offer an extensive survey of the extant literature in this area. Of particular note, however, is the recent rise in prominence of the transaction costs analysis (TCA) of vertical integration. This approach consists of a blend of institutional economics, organizational theory, and contract law, and has been developed primarily by Oliver Williamson (1979, 1985). He views vertical integration as a response to the inability of arms-length market relationships to govern exchange efficiently under particular circumstances. The level of specialized assets' required to support the exchange, the uncertainty2 surrounding the exchange, and the frequency3 of exchange are ()
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