IDEAS home Printed from
   My bibliography  Save this article

Lock-In, Vertical Integration, and Investment: The Case of Eastern European Firms


  • Liliane Giardino-Karlinger


A key prediction of transaction cost economics (TCE) is that the presence of relationship-specific assets increases the likelihood of vertical integration whenever contracts are incomplete. I explore a firm-level data set on Eastern European and Central Asian firms, the BEEPS 2005 Survey provided by the EBRD and World Bank, to test this prediction. I measure lock-in by supplier substitution, and find the TCE prediction confirmed in the data. Testing whether the determinants of vertical integration also drive investment decisions, I find that lock-in raises the probability to engage in R&D, at least on the subsample of fully privately owned, non-exporting firms.

Suggested Citation

  • Liliane Giardino-Karlinger, 2016. "Lock-In, Vertical Integration, and Investment: The Case of Eastern European Firms," Review of Economics and Institutions, Universit√† di Perugia, vol. 7(1).
  • Handle: RePEc:pia:review:v:7:y:2016:i:1:n:1

    Download full text from publisher

    File URL:
    Download Restriction: Requires registration. Users must be registered and log in to access full text

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    vertical integration; supplier substitution; transition countries;

    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
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pia:review:v:7:y:2016:i:1:n:1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ubaldo Pizzoli). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.