Benito Arruñada - Universitat Pompeu Fabra
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Administrative simplification policies should stress the value of legal institutions rather than trivializing them, as they often do.
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The Subcontracting Decision: The Case of the Construction Firm

González-Díaz, Manuel, Benito Arruñada and Alberto Fernández (1997), “The Subcontracting Decision: The Case of the Construction Firm,” Investigaciones Económicas, 21(3), 503-24.
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This paper outlines a theory of the construction firm which allows us to set forth some hypotheses about the determinants of vertical integration. These hypotheses are tested on a sample of 444 firms in 1990. Results show that subcontracting correlates negatively with specificity and positively with monitoring costs, which arise from geographic dispersion and output heterogeneity.