Fisher Body revisited: Supply contracts and vertical integration

Andreas Roider
2006 European Journal of Law and Economics  
The vertical integration of Fisher Body by General Motors has been a leading example in both the transaction-cost theory and the property-rights theory of the firm. The present paper makes the following contributions. First, we show how a simple extension of the property-rights theory of the firm (which allows for contractible trade) is able to rationalize the observed ownership arrangements, supply contracts, and investment behavior both before and after integration. Second, the model lends
more » ... port to Klein's (2000) view that an increase in demand for closed automobile bodies was pivotal for vertical integration.
doi:10.1007/s10657-006-0310-7 fatcat:2w7wauvn5vb6rklxlf7fk23pba