Affiliation, Integration, and Information: Ownership Incentives and Industry Structure

Thomas N. Hubbard

No 8300, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents theory and evidence on horizontal industry structure, focusing on situations where plant-level scale economies are small and market power is not an issue. At issue is the question: what makes industries necessarily fragmented? The theoretical model distinguishes between the structure of brands and firms in an industry by examining trade-offs associated with affiliation and integration, and how they are affected by the contracting environment. I show how contractual incompleteness can lead industries to be necessarily fragmented. I also show that improvements in the contracting environment will tend to lead to a greater concentration of brands, but whether they lead industries to be more or less concentrated depends on what becomes contractible. I then discuss the propositions generated by the model through a series of case study examples.

JEL-codes: L11 L22 (search for similar items in EconPapers)
Date: 2001-05
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as Hubbard, Thomas. "Affiliation, Integration, and Information: Ownership Incentives and Industry Structure." Journal of Industrial Economics (June 2004): 201-228.

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