We construct a price-theoretic model of firms' integration decisions under perfect competition and study their … interplay with consumer demand and welfare. Integration is costly to implement but is effective at coordinating production … integration and product price. Ownership in turn affects output: integration is more productive than non-integration at low prices …

integration often requires making functional managers responsible for implementing standardization, thereby limiting business … standardization and business-unit managers may misrepresent local market information to limit standardization. As a result …, integration may be value-destroying when motivation is sufficiently important. Providing functional managers only with "dotted …