Vertical Integration and Technology: Theory and Evidence / Daron Acemoglu, Philippe Aghion, Rachel Griffith, Fabrizio Zilibotti.

Format:

Book

Author/Creator:

Acemoglu, Daron.

Contributor:

National Bureau of Economic Research.

Aghion, Philippe.

Griffith, Rachel.

Zilibotti, Fabrizio.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10997.

NBER working paper series no. w10997

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Vertical Integration and Technology

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

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 is 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 strategies, and with or without controlling 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.

Notes:

Print version record

December 2004.