A theory of trust failure and vertical integration in industrial districts

Risultato della ricerca: Working paper


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.
Lingua originaleEnglish
Numero di pagine21
Stato di pubblicazionePubblicato - 2010


  • Industrial districts
  • Trust
  • vertical integration


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