Schmitz, Patrick W. ORCID: 0000-0003-3461-5102 (2021). On the optimality of outsourcing when vertical integration can mitigate information asymmetries. Econ. Lett., 202. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 1873-7374

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Consider a buyer and a seller who have agreed to trade an intermediate good. It is ex-post efficient to adapt the good to the prevailing state of the world. The seller has private information about the costs of adapting the good. In the case of non-integration, the buyer has no possibility to verify claims that the seller makes about her costs. In the case of vertical integration, the buyer can verify evidence about the costs that the seller might be able to provide. Even though we assume no further differences between the ownership structures, it turns out that the parties may prefer non-integration. (c) 2021 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license ( nc- nd/4.0/).

Item Type: Journal Article
CreatorsEmailORCIDORCID Put Code
Schmitz, Patrick
URN: urn:nbn:de:hbz:38-573583
DOI: 10.1016/j.econlet.2021.109823
Journal or Publication Title: Econ. Lett.
Volume: 202
Date: 2021
Place of Publication: LAUSANNE
ISSN: 1873-7374
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
EconomicsMultiple languages


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