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| Author: | Kvaloy, O. |
| Title: | Asset specificity and vertical integration |
| Journal: | Scandinavian Journal of Economics
2007 : VOL. 109:3, p. 551-572 |
| Index terms: | asset management assets contracts repeated games vertical integration |
| Language: | eng |
| Abstract: | The article investigates asset specificity and how it is related to integration. Usually asset specificity is seen as reason for vertical integration, but here it is shown that asset specificity can be an argument for non-integration. Presenting a repeated-game model of self-enforcing relational contracts, the analysis shows that if the parties are non-integrated, increase in asset specificity enables forming rational contracts with higher-powered incentives. |
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