Allain, Marie-Laure, Rey, Patrick and Teyssier, Sabrina (2021) Vertical integration as a source of hold-up: an experiment. European Economic Review, vol. 137 (n° 103783).

This is the latest version of this item.

[thumbnail of wp_tse_1062.pdf]
Download (531kB) | Preview
Identification Number : 10.1016/j.euroecorev.2021.103783


In a vertical chain in which two rivals invest before contracting with one of two competing suppliers, partial vertical integration may create hold-up problems for the rival. We develop an experiment to test this theoretical prediction in two setups, in which suppliers can either pre-commit ex ante to appropriating part of the joint profit, or degrade ex post the support they provide to their customer. Our experimental results confirm that vertical integration creates hold-up problems in both setups. However, we observe more departures from theory in the second one. Bounded rationality and social preferences provide a rationale for these departures.

Item Type: Article
Language: English
Date: August 2021
Refereed: Yes
Uncontrolled Keywords: Vertical Integration, Hold-up, Experimental Economics, Bounded Rationality, Social Preferences.
JEL Classification: C91 - Laboratory, Individual Behavior
D90 - General
J41 - Contracts - Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Sep 2021 15:25
Last Modified: 18 Jul 2023 10:13
OAI Identifier:

Available Versions of this Item

View Item


Downloads per month over past year