Journal article
A Price Theory of Vertical and Lateral Integration Under Productivity Heterogeneity
The Journal of industrial economics, v 69(4), pp 751-784
01 Dec 2021
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We analyze the interplay between product market prices and firm boundary decisions. Enterprises are heterogeneous with respect to productivity and they choose between two ownership structures-while centralized ownership (integration) performs well in coordinating managerial actions, dispersed ownership (non-integration) is conducive to poor coordination. Ownership structure is monotone, i.e., high-productivity enterprises integrate while the low-productivity ones stay separate. Price can be positively or negatively associated with integration, depending on how price changes affect the distribution of surplus within an enterprise. A negative association may result in a backward-bending industry supply. Our model delivers novel empirical and policy implications.
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Details
- Title
- A Price Theory of Vertical and Lateral Integration Under Productivity Heterogeneity
- Creators
- Kaniska Dam - Centro de Investigación y Docencia EconómicasKonstantinos Serfes - Drexel University
- Publication Details
- The Journal of industrial economics, v 69(4), pp 751-784
- Publisher
- Wiley
- Number of pages
- 34
- Grant note
- LeBow Dean's Fellowship 'Fondo de Apoyo a la Investigacion' from CIDE
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000749730000003
- Scopus ID
- 2-s2.0-85124428076
- Other Identifier
- 991019168580404721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics