Vertical Integration and the Strategic use of Private Information
AbstractThis article presents a model of bilaterial monopoly in which one of the agents possesses private information about actual production costs. The strategic disclosure of this information is used as a bargaining tactic in an attempt to appropriate the quasi rents resulting from production. We examine the market transactions costs associated with the strategic use of private information. Vertical integration restructures private incentives so that the strategic use of information is minimized, thereby resulting in increased efficiency of production.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 14 (1983)
Issue (Month): 1 (Spring)
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- Graziano, Clara, 1995. "Cost observability and renegotiation," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 359-372, December.
- Choi, Jay Pil, 1998. "Information concealment in the theory of vertical integration," Journal of Economic Behavior & Organization, Elsevier, vol. 35(1), pages 117-131, March.
- Allain, Marie-Laure & Chambolle, Claire & Rey, Patrick, 2011.
"Vertical Integration, Information and Foreclosure,"
TSE Working Papers
11-237, Toulouse School of Economics (TSE), revised Nov 2011.
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