In the literature on vertical relations little attention has been paid to the role of strategic uncertainty, that is, the presence of multiple self-enforcing outcomes which might lead to coordination failure. However, if firms have some degree of freedom in designing the industrial relations they engage, alternative solutions, in the form of vertical contracts, are possible. A game-theoretic model is provided to show how some of the most popular forms of vertical contractual relations can be derived as equilibria of a multi-stage game in which firms bargain over their reciprocal vertical control, in order to minimize the inefficiency created by strategic uncertainty.

Friends do Matter: Strategic Uncertainty and Vertical Integration

PONTI, Giovanni;
1997

Abstract

In the literature on vertical relations little attention has been paid to the role of strategic uncertainty, that is, the presence of multiple self-enforcing outcomes which might lead to coordination failure. However, if firms have some degree of freedom in designing the industrial relations they engage, alternative solutions, in the form of vertical contracts, are possible. A game-theoretic model is provided to show how some of the most popular forms of vertical contractual relations can be derived as equilibria of a multi-stage game in which firms bargain over their reciprocal vertical control, in order to minimize the inefficiency created by strategic uncertainty.
1997
Industrial Organization; Vertical Integration; Game Theory
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11392/472674
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact