Vertical Integration as a Source of Hold-up: an Experiment

Marie-Laure Allain, Claire Chambolle (), Patrick Rey and Sabrina Teyssier ()
Additional contact information
Sabrina Teyssier: Univ. Grenoble Alpes, INRA, CNRS, Grenoble INP, GAEL, 38000 Grenoble, France

No 2020-09, Working Papers from Center for Research in Economics and Statistics

Abstract: In a vertical chain in which two rivals invest before contracting with one of two competing suppliers, partial vertical integration may create hold-up problems for the rival. We develop an experiment to test this theoretical prediction in two setups, in which suppliers can either pre-commit ex ante to appropriating part of the joint profit, or degrade ex post the support they provide to their customer. Our experimental results confirm that vertical integration creates hold-up problems in both setups. However, we observe more departures from theory in the second one. Bounded rationality and social preferences provide a rationale for these departures.

Keywords: Vertical Integration; Hold-up; Experimental Economics; Bounded Rationality; Social Preferences. (search for similar items in EconPapers)
JEL-codes: C91 D90 L13 L41 L42 (search for similar items in EconPapers)
Pages: 110 pages
Date: 2020-03-13
New Economics Papers: this item is included in nep-com, nep-cta, nep-exp, nep-ind and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://crest.science/RePEc/wpstorage/2020-09.pdf CREST working paper version (application/pdf)

Related works:
Journal Article: Vertical integration as a source of hold-up: An experiment (2021)
Working Paper: Vertical integration as a source of hold-up: An experiment (2021)
Working Paper: Vertical Integration as a Source of Hold-up: an Experiment (2020)
Working Paper: Vertical integration as a source of hold-up: an experiment (2017)
Working Paper: Vertical integration as a source of hold-up: an experiment (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crs:wpaper:2020-09

Access Statistics for this paper

More papers in Working Papers from Center for Research in Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Murielle Jules Maintainer-Email : murielle.jules@ensae.Fr.