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http://hdl.handle.net/10419/40644
  
Title:Vertical integration and operational flexibility PDF Logo
Authors:Moretto, Michele
Rossini, Gianpaolo
Issue Date:2008
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: ETA, Economic theory and applications 2008,37
Abstract:The main aim of the paper is to highlight the relation between flexibility and vertical integration. To this purpose, we go through the selection of the optimal degree of vertical disintegration of a flexible firm which operates in a dynamic uncertain environment. The enterprise we model enjoys flexibility since it can switch from a certain amount of disintegration to vertical integration and viceversa. This means that the firm never loses vertical control, i.e., the ability to produce all inputs even when it buys them in the market. This sort of flexibility makes for results which are somehow contrary to the Industrial Organization recent literature and closer to the Operations Research results. In this sense we provide a bridge between the two approaches and rescue Industrial Organization from counterintuitive conclusions.
Subjects:Vertical Integration
Outsourcing
Entry
Flexibility
JEL:L24
G31
C61
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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