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Regional cooperation and corporate vertical disintegration: Evidence from Chinese listed companies

Author

Listed:
  • Wang, Hongmei
  • Hu, Zitian
  • Cui, Xinyu
  • Yuan, Chun
  • Zhao, Yang

Abstract

This study examines the impact of regional cooperation on corporate vertical disintegration. To provide a theoretical foundation, we extend the Grossman-Hart-Moore framework by incorporating parameters that capture the degree of regional cooperation and the transaction costs typically incurred by suppliers and producers. Using detailed firm-level data from Chinese listed companies, our empirical analysis demonstrates that regional cooperation significantly promotes vertical disintegration. The mechanism analysis suggests that this effect is primarily driven by a reduction in external transaction costs, which increases outsourcing efficiency and facilitates stronger inter-firm collaboration. Moreover, further analysis shows that the enhanced vertical disintegration facilitated by regional cooperation can significantly improve corporate production efficiency. These findings highlight the critical role of regional cooperation in reshaping corporate structures and enhancing economic performance.

Suggested Citation

  • Wang, Hongmei & Hu, Zitian & Cui, Xinyu & Yuan, Chun & Zhao, Yang, 2025. "Regional cooperation and corporate vertical disintegration: Evidence from Chinese listed companies," International Review of Economics & Finance, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025003429
    DOI: 10.1016/j.iref.2025.104179
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    More about this item

    Keywords

    Regional cooperation; Vertical disintegration; Transaction cost; Total factor productivity;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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