Affiliation, Integration, and Information: Ownership Incentives and Industry Structure, Journal of Industrial Economics
This paper presents theory and evidence on horizontal industry structure. At issue is the question: what makes industries necessarily fragmented? The theoretical model examines trade-offs associated with affiliation and integration, and how they are affected by the contracting environment. I show how contractual incompleteness can lead industries to be necessarily fragmented. I also show that contractual improvements will tend to lead to a greater concentration of brands, but whether they lead industries to be more or less concentrated depends on what becomes contractible. I then discuss the propositions generated by the model through a series of case study examples.
Hubbard, Thomas N.. 2004. Affiliation, Integration, and Information: Ownership Incentives and Industry Structure. Journal of Industrial Economics. 52(2): 201-227.LINK