[Coda]

Economy of scale is a specific kind (possibly the most common kind) of economy. A business could also derive an economy from, for example, being able to choose among providers.

In vertical integration, controlling the whole supply chain means you spend more money up front to get a system set up that does EXACTLY what you need it to do and nothing else, so that you save money in the long run. This is an economy of scale because that kind of setup only works if you need a WHOLE BUNCH of the same thing for a long time.

EDIT: Also, vertical integration means that it's okay for individual components of the supply chain to operate at a loss if the profit of another component makes up for it -- you don't have each business in the chain marking up the prices a little in order to make a profit.