Integration contracts and asset complementarity: Theory and evidence from US data

Di Giannatale, Paolo and Passarelli, Francesco (2018) Integration contracts and asset complementarity: Theory and evidence from US data. International Journal of Industrial Organization, 61 . pp. 192-222. ISSN 1873-7986

[img]
Preview
PDF - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Available under Licence Creative Commons Attribution Non-commercial No Derivatives.
Download (348kB) | Preview

Abstract

Firms sign integration contracts to increase profits from trade and competition with third parties. An integration contract can improve complementarity among partners (productivity effect) and increase their power in the marketplace (strategic effect). We investigate three bilateral contracts: M&A, Minority Stake purchase, and Joint Venture. By using a cooperative game approach, we characterize quite general profitability conditions. To estimate the validity of those conditions, we adopt a novel complementarity index. It shows that for any kind of contract, a significant share of the integration profits is due to the “strategic effect” of increased market power. Productivity gains are relatively less important, and in some cases they are negative.

Item Type: Article
Keywords: Cooperative games; Merger; Acquisition; Joint venture; Complementarity
Schools/Departments: University of Nottingham Ningbo China > Faculty of Business > Nottingham University Business School China
Identification Number: https://doi.org/10.1016/j.ijindorg.2018.09.002
Depositing User: QIU, Lulu
Date Deposited: 30 Oct 2018 11:16
Last Modified: 19 Sep 2020 04:30
URI: http://eprints.nottingham.ac.uk/id/eprint/55434

Actions (Archive Staff Only)

Edit View Edit View