Explaining Vertical Integration: Lessons from the American Automobile Industry

The early history of the American automobile industry provides fertile hunting grounds for theorists seeking corroboration of various, conflicting theories of vertical integration. An examination of the whole history suggests that no single theory always fits the facts perfectly. A complete explanation must combine specific theories in a way that is attentive to such factors as industry life-cycle, demand, economies of scale, and appropriability. If there is any “general” theory, it lies in the set of “dynamic” transaction-cost approaches rather than in the asset-specificity approach now dominant.

[1]  Richard N. Langlois,et al.  Economic Change and the Boundaries of the Firm , 1989 .

[2]  Paul Israel,et al.  The Sources of Innovation , 1990 .

[3]  Benjamin Klein,et al.  Vertical Integration as Organizational Ownership: The Fisher Body-General Motors Relationship Revisited , 1988 .

[4]  W. Dugger.  The Economic Institutions of Capitalism , 1987 .

[5]  L. Vogel,et al.  Strategy and Structure , 1986 .

[6]  M. Silver,et al.  Enterprise and the scope of the firm , 1984 .

[7]  Meheroo Jussawalla,et al.  Communication and information economics : new perspectives , 1984 .

[8]  Steven Cheung,et al.  The Contractual Nature of the Firm , 1983, The Journal of Law and Economics.

[9]  Y. Barzel,et al.  Measurement Cost and the Organization of Markets , 1982, The Journal of Law and Economics.

[10]  Harold Ambrose Katz,et al.  The decline of competition in the automobile industry, 1920-1940 , 1982 .

[11]  S. Pollard,et al.  The British Shipbuilding Industry, 1870-1914 , 1979 .

[12]  B. Klein,et al.  Vertical Integration, Appropriable Rents, and the Competitive Contracting Process , 1978, The Journal of Law and Economics.

[13]  W. Abernathy,et al.  The Productivity Dilemma: Roadblock t o Znnovation in the Automobile Industry , 1978 .

[14]  R. Thomas.  An Analysis of the Pattern of Growth of the Automobile Industry: 1895-1929 , 1977 .

[15]  H. Demsetz,et al.  Production, Information Costs, and Economic Organization , 1975, IEEE Engineering Management Review.

[16]  George J. Stigler,et al.  Business Concentration and Price Policy , 1955 .

[17]  M. A. Adelman,et al.  Concept and Statistical Measurement of Vertical Integration , 1955 .

[18]  G. Stigler.  The Division of Labor is Limited by the Extent of the Market , 1951, Journal of Political Economy.

[19]  R. Coase.  The Nature of the Firm , 1937 .

[20]  Eva Flügge.  Possibilities and Problems of Integration in the Automobile Industry , 1929, Journal of Political Economy.

[21]  Allyn A. Young,et al.  INCREASING RETURNS AND ECONOMIC PROGRESS , 1928 .

[22]  H. Ford,et al.  My Life and Work , 1922 .