6533b7d9fe1ef96bd126d53e
RESEARCH PRODUCT
Technical efficiency and the vertical boundaries of the firm: theory and evidence
Enrico ZaninottoFabio Pierisubject
Competition (economics)Economics and EconometricsStochastic frontier analysisbusiness.product_categoryEconomicsProduction (economics)Sample (statistics)businessInefficiencyVertical integrationIndustrial organizationMachine tooldescription
This article provides a theoretical and empirical analysis of the relationship between firms’ technical efficiency and the vertical organization of production. Technical inefficiency is explicitly introduced as the source of firms’ heterogeneity in a Bertrand–Nash model of industry competition: the main prediction of the model is that the most efficient firms choose vertical integrated structures and the less-efficient ones choose disintegrated structures. The empirical part of the article rests on a stochastic frontier analysis (SFA) in a sample of about 400 Italian machine tool (MT) builders, and the result supports the prediction of the theoretical model.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2013-11-01 | Applied Economics Letters |