Integration contracts and asset complementarity: Theory and evidence from US data
Firms sign integration contracts to increase profits from trade and competition with third parties. An integration contract can improve complementarity among partners (productivity effect) and increase their power in the marketplace (strategic effect). We investigate three bilateral contracts: M&...
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| Format: | Article |
| Language: | English |
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Elsevier
2018
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| Online Access: | https://eprints.nottingham.ac.uk/55434/ |
| _version_ | 1848799164233678848 |
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| author | Di Giannatale, Paolo Passarelli, Francesco |
| author_facet | Di Giannatale, Paolo Passarelli, Francesco |
| author_sort | Di Giannatale, Paolo |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Firms sign integration contracts to increase profits from trade and competition with third parties. An integration contract can improve complementarity among partners (productivity effect) and increase their power in the marketplace (strategic effect). We investigate three bilateral contracts: M&A, Minority Stake purchase, and Joint Venture. By using a cooperative game approach, we characterize quite general profitability conditions. To estimate the validity of those conditions, we adopt a novel complementarity index. It shows that for any kind of contract, a significant share of the integration profits is due to the “strategic effect” of increased market power. Productivity gains are relatively less important, and in some cases they are negative. |
| first_indexed | 2025-11-14T20:31:19Z |
| format | Article |
| id | nottingham-55434 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:31:19Z |
| publishDate | 2018 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-554342020-09-19T04:30:10Z https://eprints.nottingham.ac.uk/55434/ Integration contracts and asset complementarity: Theory and evidence from US data Di Giannatale, Paolo Passarelli, Francesco Firms sign integration contracts to increase profits from trade and competition with third parties. An integration contract can improve complementarity among partners (productivity effect) and increase their power in the marketplace (strategic effect). We investigate three bilateral contracts: M&A, Minority Stake purchase, and Joint Venture. By using a cooperative game approach, we characterize quite general profitability conditions. To estimate the validity of those conditions, we adopt a novel complementarity index. It shows that for any kind of contract, a significant share of the integration profits is due to the “strategic effect” of increased market power. Productivity gains are relatively less important, and in some cases they are negative. Elsevier 2018-09-19 Article PeerReviewed application/pdf en cc_by_nc_nd https://eprints.nottingham.ac.uk/55434/1/Manuscript%20Oct.22.2018.pdf Di Giannatale, Paolo and Passarelli, Francesco (2018) Integration contracts and asset complementarity: Theory and evidence from US data. International Journal of Industrial Organization, 61 . pp. 192-222. ISSN 1873-7986 Cooperative games; Merger; Acquisition; Joint venture; Complementarity https://www.sciencedirect.com/science/article/pii/S0167718717300231?via%3Dihub doi:10.1016/j.ijindorg.2018.09.002 doi:10.1016/j.ijindorg.2018.09.002 |
| spellingShingle | Cooperative games; Merger; Acquisition; Joint venture; Complementarity Di Giannatale, Paolo Passarelli, Francesco Integration contracts and asset complementarity: Theory and evidence from US data |
| title | Integration contracts and asset complementarity: Theory and evidence from US data |
| title_full | Integration contracts and asset complementarity: Theory and evidence from US data |
| title_fullStr | Integration contracts and asset complementarity: Theory and evidence from US data |
| title_full_unstemmed | Integration contracts and asset complementarity: Theory and evidence from US data |
| title_short | Integration contracts and asset complementarity: Theory and evidence from US data |
| title_sort | integration contracts and asset complementarity: theory and evidence from us data |
| topic | Cooperative games; Merger; Acquisition; Joint venture; Complementarity |
| url | https://eprints.nottingham.ac.uk/55434/ https://eprints.nottingham.ac.uk/55434/ https://eprints.nottingham.ac.uk/55434/ |