4 ms·

Vertical integration is, in general, bad for competition and often bad for consumers. There can be benefits, but too much control limits availability of parts,

by Arainach 11mo ago

Vertical integration is, in general, bad for competition and often bad for consumers. There can be benefits, but too much control limits availability of parts, confuses incentives, etc.

zer00eyz 11mo ago
> Vertical integration is, in general, bad for competition and often bad for consumers. This is a gross misunderstanding of what vertical integration is. YKK zippers makes an unbeatable product because of vertical integration. A lack of vertical integration means that you're subject to the whims of larger markets (and increased interest and costs at every step). The flip side to this is "control nothing". Buy the building your office is in and own an asset, or get a triple net lease and then pay margin on top of that. Own your own hardware or pay AWS to have 30percent profit margins...
- pessimizer 11mo ago
  > YKK zippers makes an unbeatable product because of vertical integration. YKK zippers make an unbeatable product because they are a monopoly.
  - verall 11mo ago
    A monopoly in the market for YKK branded zippers? One can buy zippers from lots of different manufacturers.
  - zer00eyz 11mo ago
    https://idealfastener.com/zippers/ https://idealfastener.com/zippers/ Also makes great zippers. They are more vertically integrated than most of their other competitors.
- Arainach 11mo ago
  (Potentially) making a better product does not mean better for a consumer, especially when a company has a dominant share of the marketplace. It potentially means you can only get parts going through the company that sells the complete product. It potentially means that you have to pay whatever price the company sets because they control the distribution pipeline.
  - zer00eyz 11mo ago
    Vertical integration has ZERO to do with any sort of market dominance. A company could be vertically integrated, and have a small portion of the market. A company could be a full on monopoly and have little to no vertical integration. YKK processing raw metals and plastics, building its own zipper making machines has nothing to do with how much market share it has. It has everything to do with product quality. Faunc is another example of "vertical integration" where they make the mills, software and controllers for their devices, as well as servos and spindles. Servos and spindles are commodity items (you can buy them cheaply from china) yet Faunc makes their own for quality and reliability reasons.
    - s1mplicissimus 11mo ago
      You are correct that a high degree of vertical integration does not necessitate market dominance. I would like to add some nuance though: As the supply chain becomes longer, the value of vertical integration rises. Now if we acknowledge that bigger players can profit more from vertical integration as well, and assume that players play equally well, we have a "devil poops on the big pile" situation, pulling the market towards a monopoly as the bigger player gets to profit more. So it's not got exactly ZERO to do with market dominance ;)

Vertical integration is, in general, bad for competition and often bad for consumers. There can be benefits, but too much control limits availability of parts, confuses incentives, etc.

zer00eyz 11mo ago

> Vertical integration is, in general, bad for competition and often bad for consumers. This is a gross misunderstanding of what vertical integration is. YKK zippers makes an unbeatable product because of vertical integration. A lack of vertical integration means that you're subject to the whims of larger markets (and increased interest and costs at every step). The flip side to this is "control nothing". Buy the building your office is in and own an asset, or get a triple net lease and then pay margin on top of that. Own your own hardware or pay AWS to have 30percent profit margins...

pessimizer 11mo ago
> YKK zippers makes an unbeatable product because of vertical integration. YKK zippers make an unbeatable product because they are a monopoly.
- verall 11mo ago
  A monopoly in the market for YKK branded zippers? One can buy zippers from lots of different manufacturers.
- zer00eyz 11mo ago
  https://idealfastener.com/zippers/ https://idealfastener.com/zippers/ Also makes great zippers. They are more vertically integrated than most of their other competitors.
Arainach 11mo ago
(Potentially) making a better product does not mean better for a consumer, especially when a company has a dominant share of the marketplace. It potentially means you can only get parts going through the company that sells the complete product. It potentially means that you have to pay whatever price the company sets because they control the distribution pipeline.
- zer00eyz 11mo ago
  Vertical integration has ZERO to do with any sort of market dominance. A company could be vertically integrated, and have a small portion of the market. A company could be a full on monopoly and have little to no vertical integration. YKK processing raw metals and plastics, building its own zipper making machines has nothing to do with how much market share it has. It has everything to do with product quality. Faunc is another example of "vertical integration" where they make the mills, software and controllers for their devices, as well as servos and spindles. Servos and spindles are commodity items (you can buy them cheaply from china) yet Faunc makes their own for quality and reliability reasons.
  - s1mplicissimus 11mo ago
    You are correct that a high degree of vertical integration does not necessitate market dominance. I would like to add some nuance though: As the supply chain becomes longer, the value of vertical integration rises. Now if we acknowledge that bigger players can profit more from vertical integration as well, and assume that players play equally well, we have a "devil poops on the big pile" situation, pulling the market towards a monopoly as the bigger player gets to profit more. So it's not got exactly ZERO to do with market dominance ;)