Vertical and horizontal integration in Imperial Russian cotton textiles, 1894–1900

Abstract When do firms produce their inputs instead of purchasing them on markets? Firms may vertically integrate when markets are thinner to mitigate price risk. However, firms that wish to vertically or horizontally integrate may be unable to do if integration requires additional capital and they face financial constraints. Using detailed factory-level and firm-level manufacturing census data, this paper supports a thin markets explanation of integration within the Russian cotton textile industry in 1894 and 1900, though integration into capital-intensive industries like spinning required financial resources. Unlike contexts in which specialized firms dominated, vertically integrated Russian cotton firms were more productive.