Vertical integration, tying, and antitrust policy

Formal proof is presented of an earlier article (Northwestern Univ. Law Rev., 55; 62-95 (Apr. 1960)) in which Meyer Burstein argued that the variable-proportions incentive for vertical integration has relevance for antitrust enforcement. Burstein's proposition also argued that there are alternatives to vertical integration by tying nonmonopolized inputs. It also implies that the economic effects of vertical integration and tying are identical, which raises the question of why the two are treated differently by present antitrust laws. Both are found to improve downstream production efficiency, although the new welfare effects are ambiguous. 16 references.