Networks versus vertical integration
Publication
, Journal Article
Kranton, RE; Minehart, DF
Published in: RAND Journal of Economics
January 1, 2000
We construct a theory to compare vertically integrated firms to networks of manufacturers and suppliers. Vertically integrated firms make their own specialized inputs. In networks, manufacturers procure specialized inputs from suppliers that, in turn, sell to several manufacturers. The analysis shows that networks can yield greater social welfare when manufacturers experience large idiosyncratic demand shocks. Individual firms may also have the incentive to form networks, despite the lack of long-term contracts. The analysis is supported by existing evidence and provides predictions as to the shape of different industries.
Duke Scholars
Published In
RAND Journal of Economics
DOI
ISSN
0741-6261
Publication Date
January 1, 2000
Volume
31
Issue
3
Start / End Page
570 / 601
Related Subject Headings
- Economics
- 3803 Economic theory
- 3802 Econometrics
- 3801 Applied economics
- 14 Economics
Citation
APA
Chicago
ICMJE
MLA
NLM
Kranton, R. E., & Minehart, D. F. (2000). Networks versus vertical integration. RAND Journal of Economics, 31(3), 570–601. https://doi.org/10.2307/2601001
Kranton, R. E., and D. F. Minehart. “Networks versus vertical integration.” RAND Journal of Economics 31, no. 3 (January 1, 2000): 570–601. https://doi.org/10.2307/2601001.
Kranton RE, Minehart DF. Networks versus vertical integration. RAND Journal of Economics. 2000 Jan 1;31(3):570–601.
Kranton, R. E., and D. F. Minehart. “Networks versus vertical integration.” RAND Journal of Economics, vol. 31, no. 3, Jan. 2000, pp. 570–601. Scopus, doi:10.2307/2601001.
Kranton RE, Minehart DF. Networks versus vertical integration. RAND Journal of Economics. 2000 Jan 1;31(3):570–601.
Published In
RAND Journal of Economics
DOI
ISSN
0741-6261
Publication Date
January 1, 2000
Volume
31
Issue
3
Start / End Page
570 / 601
Related Subject Headings
- Economics
- 3803 Economic theory
- 3802 Econometrics
- 3801 Applied economics
- 14 Economics