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Tapered integration
Tapered integration is a term from organization theory that refers to a mix of vertical integration and market exchange.〔Besanko, D., Dranove, D., Shanley, M., Schaefer, S. (2013). ''Economics of Strategy''. 6th edition, Hoboken, NJ: Wiley, p. 148.〕 Upstream, a producer might manufacture some of the input itself and buy the remaining portion independent firms. Downstream, the manufacturer might sell a portion of its output through an in-house sales force and use independent sales forces to sell the remainder.
It is not documented when the term ''tapered integration'' was first used, though it can be found in law journals such as the Yale Law Journal as early as the 1950s,〔Kessler, F., Stern, R. H. (1959). Competition, Contract, and Vertical Integration. ''The Yale Law Journal'', 69(1), p. 12.〕 the first known use in academia being a case study by William King Norris.〔Norris, W. K. (1954). ''A Case Study in Forward Tapered Integration''. University of Pennsylvania.〕
== Examples==
Examples for tapered integration are (1) Tim Hortons owning some of its retail outlets but also using franchising, (2) Coca-Cola and Pepsi both having integrated bottling subsidiaries while also relying on independent bottlers for production and distribution in some markets, or (3) BMW which uses both in-house market research from its Corporate Center Development and external market research from independent, specialized firms.〔Besanko, D., Dranove, D., Shanley, M., Schaefer, S. (2013). ''Economics of Strategy''. 6th edition, Hoboken, NJ: Wiley, p. 146.〕
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