The Fable of Fisher Body

Ramon Casadesus-Masanell () and Daniel Spulber

Journal of Law and Economics, 2000, vol. 43, issue 1, 67-104

Abstract: General Motors's (GM's) acquisition of Fisher Body is the classic example of market failure in the literature on contracts and the theory of the firm. According to the standard account, in 1926 GM merged vertically with Fisher Body, a maker of auto bodies, because of concerns over transaction-specific investment and contractual holdup. That account exhibits errors of historical fact and interpretation. General Motors acquired a 60 percent interest in Fisher Body in 1919. Moreover, the contractual arrangements and working relationship prior to the 1926 merger exhibited trust rather than opportunism. Fisher Body's production technology did not exhibit asset specificity. The merger reflected economic considerations specific to that time, not some immutable market failure. We demonstrate that vertical integration was directed at improving coordination of production and inventories, assuring GM of adequate supplies of auto bodies, and providing GM with access to the executive talents of the Fisher brothers. Copyright 2000 by the University of Chicago.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
http://dx.doi.org/10.1086/467448 (application/pdf)
Access to the online full text or PDF requires a subscription.

Related works:
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:ucp:jlawec:v:43:y:2000:i:1:p:67-104

Access Statistics for this article

More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().