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.

Preview

PDF 17703.pdf Download (47kB)

Abstract

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.

Download activity - last month

Export as JSONCSVXML

Download activity - last 12 months

Export as JSONXMLCSV

Downloads by country - last 12 months

Export as JSONCSVXML

Archive Staff Only

View Item