TY - UNPB
T1 - A theory of trust failure and vertical integration in industrial districts
AU - Merzoni, Guido Stefano
PY - 2010
Y1 - 2010
N2 - We model the interaction of independent firms within an industrial district as a repeated game of trust, where cooperative outcomes are not due to the cultural attitudes of the players, but the result of non-cooperative behaviour taking place in a stable organizational setting. When the outside option of changing partners is not too attractive, cooperation may arise also without ties between firms; when such attractiveness increases, cooperation may only be guaranteed by making the relationship more stable through a formal commitment, which may lead to a fully-fledged vertical integration. As the efficiency gains of changing partners becomes even larger, stable relationships are no longer optimal and the traditional model of industrial districts breaks down.
AB - We model the interaction of independent firms within an industrial district as a repeated game of trust, where cooperative outcomes are not due to the cultural attitudes of the players, but the result of non-cooperative behaviour taking place in a stable organizational setting. When the outside option of changing partners is not too attractive, cooperation may arise also without ties between firms; when such attractiveness increases, cooperation may only be guaranteed by making the relationship more stable through a formal commitment, which may lead to a fully-fledged vertical integration. As the efficiency gains of changing partners becomes even larger, stable relationships are no longer optimal and the traditional model of industrial districts breaks down.
KW - Industrial districts
KW - Trust
KW - vertical integration
KW - Industrial districts
KW - Trust
KW - vertical integration
UR - http://hdl.handle.net/10807/12396
M3 - Working paper
BT - A theory of trust failure and vertical integration in industrial districts
ER -