Since Ronald H. Coase's (1937) seminal paper, a rich set of theories has been developed
that deal with firm boundaries in vertical or input–output structures. In the last
twenty-five years, empirical evidence that can shed light on those theories also has
been accumulating. We review the findings of empirical studies that have addressed
two main interrelated questions: First, what types of transactions are best brought
within the firm and, second, what are the consequences of vertical integration decisions
for economic outcomes such as prices, quantities, investment, and profits.
Throughout, we highlight areas of potential cross-fertilization and promising areas
for future work.
Lafontaine, Francine, and Margaret Slade.
2007."Vertical Integration and Firm Boundaries: The Evidence."Journal of Economic Literature,