Entry and Vertical Disintegration

We formalize and extend George Stigler’s famous article “The division of labor is limited by the extent of the market.” We emphasize economies of scale in intermediate goods production as a determinant of firm boundaries and vertical control. We show that there are potential coordination failures which may prevent efficient vertical disintegration, and we discuss how these might be either overcome or used to the advantage of incumbent firms.

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Year of publication:	2005-12
Authors:	Fontenay, Alain de ; Hogendorn, Christiaan
Institutions:	Economics Department, Wesleyan University
Subject:	entry \| vertical integration \| specialization

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Extent:	application/pdf
Series:	Wesleyan Economics Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2005-010 17 pages
Classification:	D23 - Organizational Behavior; Transaction Costs; Property Rights ; L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration ; L23 - Organization of Production
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005649754