Agricultural Economics, Department of
Cornhusker Economics
Economic Impacts of Abolishing Vertical Integration in the US Pork Industry
Date of this Version
2-4-2026
Document Type
Newsletter Issue
Citation
Cornhusker Economics, February 4, 2026
Agricultural Economics, University of Nebraska-Lincoln
Abstract
The impact of abolishing vertical integration is to increase the costs of integrated firms rather than reducing their market power. And, while this increase in the costs has similar impacts on the firms involved (i.e., it reduces the market share and profits of integrated firms while increasing the market share and profits of their non-integrated rivals), the rest of the market and welfare impacts of a cost increase are the opposite of those of a market power reduction. Therefore, while a reduction in the market power of oligopolistic firms is social welfare-enhancing and, thus, socially desirable, an increase in the cost of some firms, which occurs when abolishing vertical integration, makes these firms’ rivals the only beneficiaries of this change and reduces total economic surplus and social welfare.