Do agglomeration and technology affect vertical integration? Evidence from Italian business groups
AbstractThe 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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Bibliographic InfoPaper 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.
Length: 26 pages
Date of creation: Aug 2009
Date of revision:
Business groups; spatial agglomeration; technology; vertical integration;
Other versions of this item:
- Giulio Cainelli & Donato Iacobucci, 2009. "Do Agglomeration and Technology Affect Vertical Integration? Evidence from Italian Business Groups," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 16(3), pages 305-322.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-26 (All new papers)
- NEP-COM-2009-09-26 (Industrial Competition)
- NEP-SBM-2009-09-26 (Small Business Management)
- NEP-URE-2009-09-26 (Urban & Real Estate Economics)
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- Giulio Cainelli & Donato Iacobucci, 2011.
"Agglomeration, related variety and vertical integration,"
Openloc Working Papers, Public policies and local development
1104, Public policies and local development.
- Giulio Cainelli & Donato Iacobucci, 2012. "Agglomeration, Related Variety, and Vertical Integration," Economic Geography, Clark University, vol. 88(3), pages 255-277, 07.
- Giulio Cainelli & Donato Iacobucci, 2010. "Agglomeration, related variety and vertical integration," Working Papers, c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione 1005, c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
- Antonietti, Roberto & Cainelli, Giulio & Lupi, Claudio, 2013.
"Vertical disintegration and spatial co-localization: The case of Kibs in the metropolitan region of Milan,"
Economics Letters, Elsevier,
Elsevier, vol. 118(2), pages 360-363.
- 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, Public policies and local development 1202, Public policies and local development.
- Roberto Antonietti & Maria Rosaria Ferrante & Riccardo Leoncini, 2014. "Trust your neighbour. Industrial relatedness, social capital and outsourcing," Papers in Evolutionary Economic Geography (PEEG), Utrecht University, Section of Economic Geography 1403, Utrecht University, Section of Economic Geography, revised Jan 2014.
- Isabel Diez-Vial & Emilio Alvarez-Suescun, 2010. "Geographical Agglomeration as an Alternative to Vertical Integration," Review of Industrial Organization, Springer, Springer, vol. 36(4), pages 373-389, June.
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