UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Vertical integration and distance to frontier

Acemoglu, D.; Aghion, P.; Zilibotti, F.; (2003) Vertical integration and distance to frontier. Journal of the European Economic Association , 1 (2-3) pp. 630-638. 10.1162/154247603322391260. Green open access

[thumbnail of 17703.pdf]

Download (47kB)


We construct a model where the equilibrium organization of firms changes as an economy approaches the world technology frontier. In vertically integrated firms, owners (managers) have to spend time both on production and innovation activities, and this creates managerial overload, and discourages innovation. Outsourcing of some production activities mitigates the managerial overload, but creates a holdup problem, causing some of the rents of the owners to be dissipated to the supplier. Far from the technology frontier, imitation activities are more important, and vertical integration is preferred. Closer to the frontier, the value of innovation increases, encouraging outsourcing.

Type: Article
Title: Vertical integration and distance to frontier
Open access status: An open access version is available from UCL Discovery
DOI: 10.1162/154247603322391260
Publisher version: http://dx.doi.org/10.1162/154247603322391260
Language: English
Additional information: Please see http://eprints.ucl.ac.uk/17787/ for the working paper version
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/17703
Downloads since deposit
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item