Informational Cost of Integration
Many theoretical frameworks explain why and when firms should make instead of buying an input on the market. While this impressive body of work delivered many key insights, it implicitly keeps the behavior of other market participants constant. To move from this partial equilibrium towards a general equilibrium theory of the firm, scholars need to understand the effects of vertical integration in other market participants. I address this issue by studying how the incentives for producers to share information with a supplier changes when it decides to integrate vertically.
