Do investments in specialized knowledge lead to composite good industries?

Arbeitspapier

There are more and more industries in which firms are specialized in the production of a component of the final good. This is especially true in high-tech industries. The basic question is why don't these firms merge ? We paradoxically show that industries which are typical candidates for composite good industries, are those in which high levels of investments in specialized and component based knowledge are a major source of benefits. In this important case, strictly complementary assets should be separately owned. The basic argument is linked to imperfect competition which changes the ability to extract payoff (power) and the effect of specialized investments on the quality of the composite good. Separate ownership in the case of at least 3 components both powers the individual incentive to invest and is stable with respect to unilateral deviations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 33.2002

Classification and Topics

• Classification: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Firm Organization and Market Structure
• Subject: Composite goods ; incomplete contracts ; property rights ; dual Cournot competition ; lateral disintegration ; Produktionsprogramm ; Fusion ; Wissen ; Arbeitsteilung ; Unvollkommener Wettbewerb ; Duopol ; Verhandlungstheorie ; Komplementärgut

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Soubeyran, Antoine ; Stahn, Hubert
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/119641
• Last update: 10.03.2025, 11:43 AM CET