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Vertical Integration and Firm Boundaries: The Evidence

Francine Lafontaine¹; Margaret E. Slade²

¹ University of Michigan · ² University of Warwick

Since Ronald H. Coase's (1937) seminal paper, a rich set of theories has been developed that deal with firm boundaries in vertical or input–output structures. In the last twenty-five years, empirical evidence that can shed light on those theories also has been accumulating. We review the findings of empirical studies that have addressed two main interrelated questions: First, what types of transactions are best brought within the firm and, second, what are the consequences of vertical integration decisions for economic outcomes such as prices, quantities, investment, and profits. Throughout, we highlight areas of potential cross-fertilization and promising areas for future work.

DOI

10.1257/jel.45.3.629

Volume

45 (3)

Pages

629-685

Language

en

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