Organizing Global Supply Chains: Input Cost Shares and Vertical Integration

Giuseppe Berlingieri, Frank Pisch and Claudia Steinwender

No 25286, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how the technological importance of inputs – measured by cost shares – is related to the decision to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach based on self-constructed input-output tables, we show that multinationals vertically integrate high cost share inputs. A stylized incomplete contracting model with both ex-ante and ex-post inefficiencies explains why: technologically more important inputs are “made” when transaction cost economics type forces overpower property rights type forces. However, additional results show that both types forces are needed to explain the full patterns in the data.

JEL-codes: F10 F14 F23 L16 L22 L23 O14 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-cta and nep-int
Note: IO ITI
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Citations: View citations in EconPapers (7)

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Working Paper: Organizing global supply chains: input costs shares and vertical integration (2018)
Working Paper: Organizing Global Supply Chains: Input Cost Shares and Vertical Integration (2018)
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