This paper examines the impact of vertical integration on the dynamics of performance in the context of automobile product development. Building on recent work in contract theory (Bajari and Tadelis, 2001), we first examine a number of detailed case studies to evaluate the relationship between vertical integration and different performance margins. On the one hand, outsourcing facilitates acces...

This paper examines the impact of vertical integration on the dynamics of performance in the context of automobile product development. Building on recent work in organizational economics and strategy, we examine a number of detailed case studies to evaluate the relationship between vertical integration and different performance margins. On the one hand, outsourcing facilitates access to cuttin...

Empirical analysis [see, e.g., McDonald (1985)] suggests that partial vertical integration is a widespread phenomenon. However, there are hardly any theoretical explanations for this composition of industries. Both Arrow (1975) and Green (1986) explicitly allow for partial integration to occur. The former author takes the need for information to be the driving force behind vertical integration,...

As health care reform continues its rollout in the US, restructuring the delivery system is a growing focus. With a surge in demand for care as a result of the Patient Protection and Affordable Care Act (ACA), declining reimbursement rates from Medicare and Medicaid, and pressure for greater transparency in cost and quality, many health care organizations are assessing the potential rewards and...

The main aim of the paper is to highlight the relation between flexibility and vertical integration. To this purpose, we go through the selection of the optimal degree of vertical disintegration of a flexible firm which operates in a dynamic uncertain environment. The enterprise we model enjoys flexibility since it can switch from a certain amount of disintegration to vertical integration and v...