Chapter 4 Vertical integration: Determinants and effects

Perry, Martin

doi:10.1016/s1573-448x(89)01007-1

Cited by 366 publications

(218 citation statements)

References 75 publications

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“…), according to the production cost economics, external service vendors are more efficient in bearing the risk since they can pool demand from many clients and are able to meet the same demand with less redundant capacity (Carlton 1979;Lacity and Hirschheim 1993;Perry 1989). In particular, when clients' demand shocks are not highly correlated, according to the law of large numbers, vendors can be more efficient in handling demand volume uncertainty.…”

Section: Demand Uncertainty For Service Volumementioning

confidence: 99%

Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

Xin

Levina

2008

SSRN Journal

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Section: Demand Uncertainty For Service Volumementioning

confidence: 99%

Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

Xin

Levina

2008

SSRN Journal

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“…Second, large corporations tend to operate geographically on a global scale, particularly in knowledge-intensive industries (Markusen, 1995). And third, large corporations tend to outsource many activities to external suppliers (Perry, 1989).…”

Section: Location Of Headquarters and Communication Costsmentioning

confidence: 99%

Getting There Fast: Globalization, Intercontinental Flights and Location of Headquarters

2005

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This paper examines the determinants of the location of large firms' headquarters across a rich sample of European urban areas, focusing on the availability of non-stop intercontinental flights. We also account for the influence of other aspects: the proximity to large markets and specialized providers, congestion and tax costs, the availability of skilled labor and the role of the urban area in the home country. Controlling for these factors, we find that the availability of direct non-stop flights has a large influence on headquarters' location. This confirms the importance of transport infrastructures and tacit information exchanges between cities for firm location. Getting there fast: Globalization, intercontinental flights and location of headquartersAbstract: This paper examines the determinants of the location of large firms' headquarters across a rich sample of European urban areas, focusing on the availability of non-stop intercontinental flights. We also account for the influence of other aspects: the proximity to large markets and specialized providers, congestion and tax costs, the availability of skilled labor and the role of the urban area in the home country. Controlling for these factors, we find that the availability of direct non-stop flights has a large influence on headquarters' location. This confirms the importance of transport infrastructures and tacit information exchanges between cities for firm location.

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“…A complementary class of theories emphasize allocative, rather than productive, efficiency gains achieved by the elimination of double markups, though these shall not concern us. See Perry (1989) and Riordan (2008) for further discussion.…”

Section: Introductionmentioning

confidence: 99%

Do Prices Determine Vertical Integration?

Alfaro

Conconi

Fadinger

et al. 2016

Review of Economic Studies

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What is the relationship between product prices and vertical integration? While the literature has focused on how integration affects prices, this paper provides evidence that prices can affect integration. Many theories in organizational economics and industrial organization posit that integration, while costly, increases productivity. It follows from firms' maximizing behavior that higher prices induce more integration. The reason is that at low prices, increases in revenue resulting from enhanced productivity are too small to justify the cost, whereas at high prices the revenue benefit exceeds the cost. Trade policy provides a source of exogenous price variation to assess the validity of this prediction: higher tariffs should lead to higher prices and therefore to more integration. We construct firmlevel indices of vertical integration for a large set of countries and industries and exploit cross-section and time-series variation in import tariffs to examine their impact on firm boundaries. Our empirical results provide strong support for the view that output prices are a key determinant of vertical integration. JEL classifications: D2, L2, Keywords: Theory of the firm, vertical integration, product prices. * We are grateful to Daron Acemoglu, Robby Akerlof, Nick Bloom, Francesco Decarolis, Bob Gibbons, Davin Chor, Gene Grossman, Maria Guadalupe, Ali Hortaçsu, Louis Kaplow, Patrick Legros, Margaret McMillan, Emanuel Ornelas, Mike Powell, Raffaella Sadun, Chad Syverson, John Van Reenen, Chris Woodruff and numerous seminar and conference participants for their valuable suggestions and comments. Research funding from the FNRS and the European Commission (PEGGED collaborative project) is gratefully acknowledged by Conconi. For their hospitality and support, Newman is grateful to the Yale Economic Growth Center and the Brown Population Studies and Training Center. We thank Francisco Pino, Andrea Colombo and Qiang Wang for excellent research assistance.

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Chapter 4 Vertical integration: Determinants and effects

Cited by 366 publications

References 75 publications

Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

Getting There Fast: Globalization, Intercontinental Flights and Location of Headquarters

Do Prices Determine Vertical Integration?

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