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January 31, 2012updated 04 Apr 2017 3:44pm

Vertical integration among wealth management augurs well for consumers, study

Increased vertical integration among wealth management firms is more likely to be pro-competitive and could actually lead to reduction price of products, according to a new study by the University of Melbourne.

By Verdict Staff

"We find, somewhat surprisingly, that vertical integration is more likely to be pro-competitive if the industry is more concentrated," Simon Loertscher senior lecturer at University of Melbourne said in a recent working paper.

"This effect could even be achieved in some cases where integration bordered on a monopoly," InvestorDaily quoted Loertscher as saying."In the extreme, even monopolizing the downstream market can enhance consumer welfare because the integrated firm expands its quantity by a very large extent after integrating," he said.

According to study, regulators should actually be particularly more wary of vertical mergers when there are more firms in a particular industry, rather than fewer.

However, Loertscher’s research was not based on the wealth management industry and hence may or may nor to apply to the industry.


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