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Journal article
Organizing Global Supply Chains: Input-Output Linkages and Vertical Integration
Giuseppe Berlingieri, Frank Pisch and Claudia Steinwender June 2020
Paper No' :

Tags: empirical studies of tradel16 - industrial organization and macroeconomics: industrial structure and structural change; industrial price indicesl23 - organization of productiono14 - industrialization; manufacturing and service industries; choice of techn

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 technologically important 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.