We analyze the interplay between product market prices and firm boundary decisions. Enterprises are heterogeneous with respect to their productivities and each enterprise chooses between two own- ership structures—centralized ownership (integration) performs well in coordinating managerial ac- tions but ignores private costs; dispersed ownership (non-integration), on the other hand, overvalues private costs but is conducive to poor coordination. The equilibrium ownership structure is monotone, i.e., high-productivity enterprises integrate while the low-productivity ones stay separate. Product market price can be positively or negatively associated with the incidence of integration, depending on how a price change affects the endogenously determined distribution of surplus between the units that comprise an enterprise. As higher prices may result in less integration, the industry supply may be backward-bending. Our model delivers novel empirical and policy implications.