What And Who Benefits From Market Integration?


Market integration is a term for identifying an occurrence in which markets of related products and services experience the same sequences of increase or decrease of prices of those products.

The term can also talk about a situation in which the prices of similar goods and services sold in a definite geographical location also start to move in some like pattern to one another. Sometimes, the integration may be deliberate, with a government applying certain policies to control the course of the economy.

Conversely, the integrating of the markets can be because of factors like changes in supply and demand that greatly affect many markets.

Types of Market Integration

Horizontal Integration
This is when an agency controls other firms with the same marketing tasks at a similar level in the marketing pattern.

Therefore, some marketing agencies unite to build a union to decrease their effective number and real competition in the market. It gives main advantages for the new members.

Vertical Integration

This takes place when a firm does several activities in the order of the marketing process. It is combining two roles in the marketing process in a single firm or with single ownership.

This type of integration enables control over the quality and quantity of the product from the start of the production process till when the product is ready for sale. It cuts the number of intermediaries in the marketing channel.

There are two categories in vertical integration;

•    Forward integration
When a firm takes up another marketing function similar to the consumption function; it is called forward integration. For instance, when a wholesaler does the function of retailing.

•    Backward integration
This comprises a combination of sources of supply; For instance, when a processing firm takes up the job of buying the produce from the villages.

Conglomeration

A conglomeration is a combination of activities not directly linked to one another and functions under united management.

Advantages of Market Integration

The advantages of market integration come under three categories;
•    Trade benefits
•    Employment
•    Political cooperation

Most importantly, market integration usually causes; a decrease in the cost of trade, better availability of products and services and a broader selection of them, and profits in productivity that lead to better buying power.
Trade liberalization also improves employment opportunities, leading to market growth, technology distribution, and external investment.

Lastly, political collaboration among countries can also advance from the stronger economic relations, which enticement to settle conflicts peacefully, leading to better stability.


The Costs of Market Integration

Despite the benefits, market integration comes with substantial costs. These fall into two groups:

•    Diversion of trade: Trade can divert from non-members to members, even though it is economically damaging for the member side.

•    Erosion of national sovereignty:
Members of economic unions should observe the rules on trade and financial policies recognized by an unselected external regulatory body.

Since economists and legislators consider economic integration comes with significant benefits, several organizations try to measure the extent of economic integration in different regions and countries.


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