Information Technology And The Vertical Organization Of Industry

A model has been developed to study the interdependence between a firm’s choice of information technology and degree of integration, and the structure of its industry. Advances in information technology might provide incentives for a firm to specialize or focus on its core competence. However, the success of its specialization strategy depends on the extent of industry-level specialization, which is, in turn, the result of the behavior of individual firms and their adoption of information technology favoring specialization. Electronic markets and industries have been chosen as an application domain, as they would not even exist without information technology. Furthermore, they are very dynamic emerging industries with rapidly changing structures.