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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Vertical Integration and Technology: Theory and Evidence |
| Organization Unit | |
| Authors |
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| Language |
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| Institution | University of Zurich |
| Series Name | Working paper series / Institute for Empirical Research in Economics |
| Number | No. 342 |
| ISSN | 1424-0459 |
| Date | 2007 |
| Abstract Text | This paper investigates the determinants of vertical integration. We first derive annumber of predictions regarding the relationship between technology intensity and vertical integration from a simple incomplete contracts model. Then, we investigate these predictions using plant-level data for the UK manufacturing sector. Most importantly, and consistent with theory, we find that the technology intensities of downstream (producer) and upstream (supplier) industries have opposite effects on the likelihood of vertical integration. Also consistent with theory, both 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 ofnfirm and industry-level characteristics. |
| Official URL | http://www.econ.uzh.ch/wp.html |
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