Do agglomeration and technology affect vertical integration? Evidence from Italian business groups

Giulio Cainelli and Donato Iacobucci ()

No 903, Working Papers from c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione

Abstract: The aim of this paper is to analyse the role of technology and spatial agglomeration in decisions about vertical integration. It starts from the hypotheses that the business group, defined as a set of firms under common ownership and control, is the appropriate unit to delimit the firm’s boundary. We use information drawn from input-output tables to detect the presence of positive inter-industry exchanges and whether or not activities in a group are vertically related. Accounting for endogeneity problems, we estimate Probit and Linear Probability models to empirically investigate the role of technology and spatial agglomeration on vertical integration decisions. Consistent with property rights theory, our results show that the technology intensity of acquirers matters for backward integration choices and moreover, that agglomeration plays a role in vertical integration only when it operates jointly with technology.

Keywords: Business groups; spatial agglomeration; technology; vertical integration (search for similar items in EconPapers)
JEL-codes: L22 R12 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2009-08
New Economics Papers: this item is included in nep-com, nep-sbm and nep-ure
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Citations: View citations in EconPapers (8)

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http://193.205.129.80/repec/cme/wpaper/cmetwp_03_2009.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Do Agglomeration and Technology Affect Vertical Integration? Evidence from Italian Business Groups (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cme:wpaper:0903

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