A theory of trust failure and vertical integration in industrial districts
AbstractWe model the interaction of independent firms within an industrial district as a repeated game of trust, where cooperative outcomes are not due to the cultural attitudes of the players, but the result of non-cooperative behaviour taking place in a stable organizational setting. When the outside option of changing partners is not too attractive, cooperation may arise also without ties between firms; when such attractiveness increases, cooperation may only be guaranteed by making the relationship more stable through a formal commitment, which may lead to a fullyfledged vertical integration. As the efficiency gains of changing partners becomes even larger, stable relationships are no longer optimal and the traditional model of industrial districts breaks down.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS) in its series DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo with number dis1001.
Date of creation: 2010
Date of revision:
Contact details of provider:
Postal: Via Necchi n. 5 - 20123 Milano
Phone: 02 7234.3788
Fax: 02 7234.3789
Web page: http://dipartimenti.unicatt.it/economia_internazionale_istituzioni_sviluppo
More information through EDIRC
trust relationships; industrial districts; vertical integration;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chaim Fershtman & Kenneth L Judd, 1984.
"Equilibrium Incentives in Oligopoly,"
642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Colombo Ferdinando & Merzoni Guido, 2004. "Reputazione, flessibilità e durata ottima dei contratti," Economia politica, Società editrice il Mulino, issue 2, pages 233-268.
- Ferdinando Colombo & Guido Merzoni, 2008. "For how long to tie your hands? Stable relationships in an unstable environment," Journal of Economics, Springer, vol. 95(2), pages 93-120, November.
- Parikshit Ghosh & Debraj Ray, 1995.
"Cooperation in Community Interaction Without Information Flows,"
Boston University - Institute for Economic Development
64, Boston University, Institute for Economic Development.
- Ghosh, Parikshit & Ray, Debraj, 1996. "Cooperation in Community Interaction without Information Flows," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 491-519, July.
- David Kreps & Robert Wilson, 1999.
"Reputation and Imperfect Information,"
Levine's Working Paper Archive
238, David K. Levine.
- Annen, Kurt, 2003. "Social capital, inclusive networks, and economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 449-463, April.
- Colombo, Ferdinando & Merzoni, Guido, 2006. "In praise of rigidity: The bright side of long-term contracts in repeated trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 349-373, March.
- repec:ept:journl:v:xxi:y:2004:i:168en:p:233-268 is not listed on IDEAS
- Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
- Samuel Bowles & Herbert Gintis, 2001.
"Social Capital and Community Governance,"
01-01-003, Santa Fe Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Teodora Erika Uberti).
If references are entirely missing, you can add them using this form.