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Vertical Integration and Market Structure

In: The Handbook of Organizational Economics

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Listed author(s):
  • Timothy Bresnahan
  • Jonathan Levin

Abstract

Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these predictions, but less progress in quantifying their importance. One difficulty is that empirical applications often must consider firm structure together with industry structure. Research in industrial organization frequently has adopted this perspective, emphasizing how scale and scope economies, and strategic considerations, influence patterns of industry integration. But this research has paid less attention to contractual or organizational details, so that these two major lines of research on vertical integration have proceeded in parallel with only rare intersection. We discuss the value of combining different viewpoints from organizational economics and industrial organization.

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This chapter was published in: Robert Gibbons & John Roberts (ed.) The Handbook of Organizational Economics, Princeton University Press, Princeton, NJ, pages , 2012.
This item is provided by Princeton University Press in its series Introductory Chapters with number 9889-21.
Handle: RePEc:pup:chapts:9889-21
Contact details of provider: Web page: http://press.princeton.edu

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Find related papers by JEL classification:
  • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
  • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
  • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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Cited by:

  1. Buehler, Stefan & Burghardt, Dirk, 2013. "Globalization and Vertical Structure: An Empirical Investigation," Economics Working Paper Series 1310, University of St. Gallen, School of Economics and Political Science.
  2. Christopher Hansman & Jonas Hjort & Gianmarco León & Matthieu Teachout, 2017. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," Working Papers 961, Barcelona Graduate School of Economics.
  3. Uwe Cantner & Ivan Savin & Simone Vannuccini, 2016. "Replicator dynamics in value chains: explaining some puzzles of market selection," Jena Economic Research Papers 2016-003, Friedrich-Schiller-University Jena.
  4. Julien Brunet & Jean-Pierre Ponssard, 2016. "Policies and Deployment for Fuel Cell Electric Vehicles An Assessment of the Normandy Project," Working Papers hal-01366205, HAL.
  5. Gregory S. Crawford, 2015. "The economics of television and online video markets," ECON - Working Papers 197, Department of Economics - University of Zurich.
  6. Bayo-Moriones, Alberto & Galdon-Sanchez, Jose Enrique & Gil, Ricard, 2013. "'Make-or-Buy' of Peripheral Services in Manufacturing: Evidence from Spanish Plant-Level Data," IZA Discussion Papers 7138, Institute for the Study of Labor (IZA).
  7. Galdon-Sanchez, Jose Enrique & Gil, Ricard & Bayo-Moriones, Alberto, 2015. "Outsourcing of peripheral services: Evidence from Spanish manufacturing plant-level data," European Economic Review, Elsevier, vol. 78(C), pages 328-344.
  8. Robert Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 337-365, September.
  9. Crawford, Gregory S., 2015. "The Economics of Television and Online Video Markets," CEPR Discussion Papers 10676, C.E.P.R. Discussion Papers.
  10. Tomoo Kikuchi & Kazuo Nishimura & John Stachurski, 2012. "Coase meets Tarski: New Insights from Coase's Theory of the Firm," KIER Working Papers 828, Kyoto University, Institute of Economic Research.
  11. Gianmarco León & Christopher Hansman & Jonas Hjort & Matthieu Teachout, 2017. "Vertical integration, supplier behavior, and quality upgrading among exporters," Economics Working Papers 1562, Department of Economics and Business, Universitat Pompeu Fabra.
  12. Chen, Brian K. & Gertler, Paul J. & Yang, Chun-Yuh, 2016. "Physician ownership of complementary medical services," Journal of Public Economics, Elsevier, vol. 144(C), pages 27-39.
  13. Koch, Thomas G. & Wendling, Brett W. & Wilson, Nathan E., 2017. "How vertical integration affects the quantity and cost of care for Medicare beneficiaries," Journal of Health Economics, Elsevier, vol. 52(C), pages 19-32.

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