Manufacturers can choose to remain separate from their retailers for both incentive and strategic reasons. In this paper, strategic motives for vertical separation are examined empirically. Two data sets are used for the assessment. The first is a cross section of all contracts between private,...

Understanding what determines firm boundaries and the choice between interacting in a firm or a market is not only the fundamental concern of the theory of the firm, but it is also one of the most important issues in economics. Data on value added, for example, reveal that in the US,...