Do Investments in Specialized Knowledge Lead to Composite Good Industries?
AbstractWe try to understand why firms producing goods by means of complementary components do not merge, especially in industries in which investments in component-based knowledge matters. As Audretsch, we state that these activities are developed by “individuals” who do their best to appropriate the return from their knowledge and whose effort is non-contractible. The organization of the industry into firms is identified to a partition of the set of individuals. In this context, we prove that an organization in which each individual hold his own firms is both stable with respect to unilateral deviation and optimal in the line of the property right approach. If the returns are high enough, this structure is even the only one which shares both properties. Copyright Springer 2007
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Bibliographic InfoArticle provided by Springer in its journal Small Business Economics.
Volume (Year): 29 (2007)
Issue (Month): 1 (June)
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Web page: http://www.springerlink.com/link.asp?id=100338
composite goods; dual Cournot competition; lateral disintegration; incomplete contracts; property rights; D23; D43; L22;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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