Aghion P, Bertola G, Hellwig M, Pisani-Ferry J, Sapir A, Vinals J, Wallace H.
An Agenda for a Growing Europe: The Sapir Report. Oxford University Press; 2003.
Publisher's Version Aghion P, Dewatripont M, Rey P.
Transferable Control. Journal of the European Economic Association. 2003.
Aghion P, Acemoglu D, Zilibotti F.
Vertical Integration and Distance to Frontier. Journal of the European Economic Association, Papers and Proceedings. 2003.
AbstractWe construct a model where the equilibrium organization of firms changes as an economy approaches the world technology frontier. In vertically integrated firms, owners (managers) have to spend time both on production and innovation activities, and this creates managerial overload, and discourages innovation. Outsourcing of some production activities mitigates the managerial overload, but creates a holdup problem, causing some of the rents of the owners to be dissipated to the supplier. Far from the technology frontier, imitation activities are more important, and vertical integration is preferred. Closer to the frontier, the value of innovation increases, encouraging outsourcing.
PDF Aghion P, Bolton P.
Incomplete Social Contracts. Journal of the European Economic Association. 2003.