nep-ind New Economics Papers
on Industrial Organization
Issue of 2005‒03‒13
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Vertical Differentiation and Entry Deterrence: A Reconsideration. By Lander Beloki; Jose María Usategui
  2. Vertical integration and technology: theory and evidence By ; Daron Acemoglu; Philippe Aghion; Rachel Griffith; Fabrizio Zillibotti

  1. By: Lander Beloki (University of Mondragón (Spain)); Jose María Usategui (Universidad del País Vasco)
    Keywords: Vertical differentiation, market coverage, entry deterrence, quality competition
    JEL: L13 D43
    Date: 2005–03–07
  2. By: ; Daron Acemoglu; Philippe Aghion (Institute for Fiscal Studies and Harvard University); Rachel Griffith (Institute for Fiscal Studies); Fabrizio Zillibotti (Institute for Fiscal Studies)
    Abstract: This paper investigates the determinants of vertical integration using data from the UK manufacturing sector. We find that the relationship between a downstream (producer) industry and an upstream (supplier) industry us more likely to be vertically integrated when the producing industry is more technology intensive and the supplying industry is less technology intensive. Moreover, both of these effects are stronger when the supplying industry accounts for a large fraction of the producer\\\'s costs. These results are generally robust and hold with alternative measures of technology intensity, with alternative estimation straegies, and with or without contraolling for a number of firm and industry-level characteristics. They are consistent with the incomplete contract theories of the firm that emphasize both the potential costs and benefits of vertical integration in terms of investment incentives.
    Keywords: holdup, incomplete contracts, internal organisation fo the firm, investment, R&D, technology, vertical integration
    JEL: L22 L23 L24 L60
    Date: 2004–12

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