Vertical Integration as Firm-Level Response to Electricity Shortages: Does Transaction Cost Economics Explain?

摘要: In developing countries, industries are often plagued with power shortages. response, some firms make their own electric but most of the others do not. Why we observe such divergent behavior in decision to self-generate? Previous literature focuses on factor demand and marginal cost structure as key determinants for self-generate does not explain similar characteristics. We take perspective contractual relationships treat electricity provision a transaction. Applying discrete choice ‘make or buy’ model primary dataset Indian manufacturing firms, find that it is sensitivity ‘transaction-specificity’ use makes them opt self-generation. But this constrained by contextual factors like firm size, location operational environment. conclude even standardized physically non-specific asset can generate ‘transaction-specific’ costs, if context demands so. contend transaction economics only explains vertical integration contexts be used industrial organization other energy resources which may otherwise nature.