Vertical Integration and Technology: Theory and Evidence
Name
Acemoglu-2010-VERTICAL INTEGRATION.pdf
Size
243.98 KB
Format
Adobe PDF
Checksum (MD5)
5a894569b2e945ca7745fe2566c0fd44
Author(s)
Acemoglu, Daron
Griffith, Rachel
Aghion, Philippe
Zilibotti, Fabrizio
Date Issued
September 2010
Journal
Journal of the European Economic Association
Publisher
MIT Press
Citation
Acemoglu, Daron et al. “Vertical Integration and Technology: Theory and Evidence.” Journal of the European Economic Association 8.5 (2010): 989-1033. © 2010 by the European Economic Association.
Version
Final published version
Abstract
We study the determinants of vertical integration. We first derive a number of predictions regarding the relationship between technology intensity and vertical integration from a simple incomplete contracts model. Then, we investigate these predictions using plant-level data for the UK manufacturing sector. Most importantly, and consistent with the theoretical predictions, we find that the technology intensity of downstream (producer) industries is positively correlated with the likelihood of integration whereas the intensity of upstream (supplier) industries is negatively correlated with it. Also consistent with theory, both correlations are stronger when the supplying industry accounts for a large fraction of the producer's costs. These results are generally robust and hold with alternative measures of technology intensity, with alternative estimation strategies, and with or without controlling for a number of firm- and industry-level characteristics.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1111/j.1542-4774.2010.tb000546.x
