Among the various reasons that vertical integration could be profitable, one issue is whether an integrated firm could act strategically to gain enough of a competitive advantage over equally efficient rivals that its integration would be profitable. Models of vertical integration between successive oligopolistic industries have imposed on integrated firms two kinds of self-denial. First, when a retailer and a manufacturer integrate, they are assumed to set the internal transfer price of the intermediate product equal to its marginal cost. However, an integrated noncooperative oligopolist that sets transfer price equal to marginal cost in effect just abandons the market power that the manufacturer had prior to integration. Furthermore, with marginal cost transfer pricing, integration by some firms creates incentives for counterintegration by other firms, which may end with all firms having lower profits. In the successive duopoly model of Ordover, Salop, and Saloner (OSS) [7], an integrated firm uses an indirect strategy of manipulating the intermediate good price between the nonintegrated firms, thereby forestalling their counterintegration, and leaving the integrated firm with higher profit. This paper uses a linear duopoly model1 that demonstrates that manipulating internal transfer prices can be a more direct strategy for an integrated firm to forestall counterintegration and increase its own profits. Since no one dictates internal transfer prices to a firm, an integrated firm implicitly has the ability to set the transfer price at some value other than marginal cost, including just maintaining the preintegration market price as the transfer price. The model implements an unexplored suggestion by OSS [7, 131] that an integrated firm might be able to use internal transfer prices different from marginal cost. In the second form of self-denial imposed on models of vertical integration, an integrated firm is assumed not to sell the intermediate product to any remaining nonintegrated retailers nor to buy intermediate product from any remaining nonintegrated manufacturers.2 But if the nonintegrated firms trade the intermediate good at a market price higher than the vertically integrated firm's marginal cost, then the integrated firm may be able to sell the intermediate good profitably,