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Do Investments in Specialized Knowledge Lead to Composite Good Industries?

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  • Antoine Soubeyran

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Hubert Stahn

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We try to understand why firms producing goods by means of complementary components do not merge, especially in industries in which investments in component-based knowledge matters. As Audretsch, we state that these activities are developed by "individuals" who do their best to appropriate the return from their knowledge and whose effort is non-contractible. The organization of the industry into firms is identified to a partition of the set of individuals. In this context, we prove that an organization in which each individual hold his own firms is both stable with respect to unilateral deviation and optimal in the line of the property right approach. If the returns are high enough, this structure is even the only one which shares both properties.

Suggested Citation

  • Antoine Soubeyran & Hubert Stahn, 2007. "Do Investments in Specialized Knowledge Lead to Composite Good Industries?," Post-Print hal-05268027, HAL.
    • Handle: RePEc:hal:journl:hal-05268027
    DOI: 10.1007/s11187-006-0008-9
    Note: View the original document on HAL open archive server: https://hal.science/hal-05268027v1
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    References listed on IDEAS

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    1. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 299-322, National Bureau of Economic Research, Inc.
    2. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 299-322, National Bureau of Economic Research, Inc.
    3. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    4. Bernheim, B. Douglas & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria II. Applications," Journal of Economic Theory, Elsevier, vol. 42(1), pages 13-29, June.
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