Pengaruh Integrasi Vertikalpada Efisiensi Dan Persaingan: Studi Empiris Pada Industri Rokok Kretek Tahun 1976-2001 = The Influence of Vertical Integration on Competition and Efficiency: Empirical Study on Rokok Kretek ..
Government of Indonesia chooses antitrust policy to control big indus-tries in this country by implementing Undang-Undang No: 5/ 1999. The objectives of antitrust policy are to keep a competition condition in order to give a good quality product at the low price for consumers and to determine a fair...
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| Format: | Article NonPeerReviewed |
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[Yogyakarta] : Universitas Gadjah Mada
2004
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| Online Access: | https://repository.ugm.ac.id/24428/ http://i-lib.ugm.ac.id/jurnal/download.php?dataId=7403 |
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| Institution: | Universitas Gadjah Mada |
| Summary: | Government of Indonesia chooses antitrust policy to control big indus-tries in this country by implementing Undang-Undang No: 5/ 1999. The objectives of antitrust policy are to keep a competition condition in order to give a good quality product at the low price for consumers and to determine a fair condition for producers as an important factor to achieve. Competition and efficiency are the most important factors to achieve those objectives.
Vertical integration is the organization within a single firm of more than one stage of the production or distribution of a good or services. Produc-ing any good or service involves several stages: producing raw materials, processing raw materials into an intermediate and then final good, and dis-tributing the good to wholesalers and retailers before it reaches the final consumer. Vertical integration can refer either to forward integration, in which a firm combines manufacturing with distribution of the product, or to back-ward integration, in which a firm combines manufacturing a product with producing the raw materials that are input to its manufacture.
Firms vertically integrate in order to foreclose competition. Vertical inte-gration may increase the costs and decrease the availability of inputs to other produces, increase the capital required to compete, and limit access to distri-bution channels. Conversely, vertical integration can mitigate the effects of concentration in case where each stage of production is controlled by a mo-nopoly. In such a case, there may be output restriction at each stage, and vertical integration can both increase total profits and consumer welfare by eliminating "double marginalization".
Clove cigarette industry has a high vertical integration index (value added/ production). Vertical integration in this industry stimulates with a high dependency to raw materials supply and the need to make a product distribution easier. From the estimation we found that vertical integration in this industry does not restrict competition but encourage an efficiency by pushing the value of profit.
Keywords: Vertical integration Competition -- Efficiency -- Market Structure Effect -- Cost Effect |
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