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Do agglomeration and technology affect vertical integration? Evidence from Italian business groups

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Author Info

  • Giulio Cainelli

    () (Dipartimento per lo Studio delle Società Mediterranee, Università degli Studi di Bari)

  • Donato Iacobucci

    () (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche)

Abstract

The aim of this paper is to analyse the role of technology and spatial agglomeration in decisions about vertical integration. It starts from the hypotheses that the business group, defined as a set of firms under common ownership and control, is the appropriate unit to delimit the firm’s boundary. We use information drawn from input-output tables to detect the presence of positive inter-industry exchanges and whether or not activities in a group are vertically related. Accounting for endogeneity problems, we estimate Probit and Linear Probability models to empirically investigate the role of technology and spatial agglomeration on vertical integration decisions. Consistent with property rights theory, our results show that the technology intensity of acquirers matters for backward integration choices and moreover, that agglomeration plays a role in vertical integration only when it operates jointly with technology.

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File URL: http://193.205.129.80/repec/cme/wpaper/cmetwp_03_2009.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione in its series Working Papers with number 0903.

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Length: 26 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:cme:wpaper:0903

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Web page: http://www.cmet.it
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Related research

Keywords: Business groups; spatial agglomeration; technology; vertical integration;

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Cited by:
  1. Roberto Antonietti & Giulio Cainelli & Claudio Lupi, 2012. "Vertical disintegration and spatial co-localization: the case of Kibs in the Metropolitan Region of Milan," Openloc Working Papers 1202, Public policies and local development.
  2. Giulio Cainelli & Donato Iacobucci, 2012. "Agglomeration, Related Variety, and Vertical Integration," Economic Geography, Clark University, vol. 88(3), pages 255-277, 07.
  3. Isabel Diez-Vial & Emilio Alvarez-Suescun, 2010. "Geographical Agglomeration as an Alternative to Vertical Integration," Review of Industrial Organization, Springer, vol. 36(4), pages 373-389, June.

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