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Lock-In, Vertical Integration, and Investment: The Case of Eastern European Firms ∗
TLDR
In this article, the authors explore a firm-level data set on Eastern European and Central Asian firms, the BEEPS 2005 Survey provided by the EBRD and World Bank, to test this prediction.Abstract:
A key prediction of transaction cost economics (TCE) is that the presence of relationship-specific assets increases the likelihood of vertical integration whenever contracts are incomplete. I explore a firm-level data set on Eastern European and Central Asian firms, the BEEPS 2005 Survey provided by the EBRD and World Bank, to test this prediction. I measure lock-in by supplier substitution, and find the TCE prediction confirmed in the data. Testing whether the determinants of vertical integration also drive investment decisions, I find that lock-in raises the probability to engage in R&D, but has no robust effect on investment in physical assets. JEL classification: L14, L23, L25.read more
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Innovation Capacity: A Firm Level Response to Subsidy Activity in a National Setting
TL;DR: In this article , the authors investigate the effect subsidies have on firm-level innovation across Eastern European and Central Asian countries and assess if these effects move to increase firm level capability and find that subsidies promote innovation and that when these subsidies are contemporaneously considered in the face of the decision to adopt foreign technologies and employ in-house R&D, firm level capacity increases.
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The Nature of the Firm
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Markets and Hierarchies: Analysis and Antitrust Implications.
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The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration
Sanford J. Grossman,Oliver Hart +1 more
TL;DR: In this paper, a theory of costly contracts is presented, which emphasizes the contractual rights can by of two types: specific rights and residual rights, and when it is costly to list all specific rights over assets, it may be optimal to let one party purchase all residual rights.