We analyze the interplay between product market prices and firm boundary decisions. Enterprises are heterogeneous with respect to their productivities and each enterprise chooses between two ownership structures--centralized ownership (integration) performs well in coordinating managerial...

We consider a market where each firm is created by the combination of two complementary assets that are heterogeneous in their productivity. After assets match endogenously, their owners choose between two ownership structures: integration and non-integration. Our main focus is on the interplay...