Market power to use price discrimination is seen as a motive for vertical intergration (See pic). How so?

Price discrimination: Charge different prices in different markets (e.g., Because your input is used for different varieties of a good) Price discrimination require 3 things to work: 1. Producer has some monopoly power (in more than one market) 2. Different price elasticities of demand in the different markets 3. No side-trading possible, i.e. byuers cannot by-pass the monopolist Price discrimination is easier for the monopolist to implement by making sure that downstream firms do not sell your input with each other bypassing you. Example: Price discimination and forward integration of aluminium producer (See pic)