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We analyze a rational-expectations model of price formation in an intermediategood market under uncertainty. There is a continuum of dyads, each consisting of an upstream party and a downstream party. Both parties can make speci...c investments at private cost, and there is a machine that either party can own. As in propertyrights models, di¤erent ownership structures create di¤erent incentives for the parties' investments. As in rational-expectations models, some parties may invest indoi:10.3386/w15779 fatcat:f4e5o23u6nbodfomi7gpqtnk5e