Transaction costs and vertical integration: An application to the Wine of Rioja


  • Marta Fernández-Olmos Universidad de Zaragoza
  • Jorge Rosell-Martínez Universidad de Zaragoza
  • Manuel A. Espitia-Escuer Universidad de Zaragoza



Vertical integration, Wine industry, Transaction cost theory


This article develops and tests a model of integration of the first stage of the wine value chain, i.e. the viticulture activity. The model, derived from the transaction cost analysis developed principally by Williamson, is formulated as a tobit function, which is estimated with data from the wine industry in the Rioja’s denomination of origin. The nature of the relationship between product quality and vertical integration is also established. Consistently with the transaction cost theory, integration is associated with increasing levels of asset specificity and uncertainty. Results also indicate that the winery size significantly affects make-buy choices. As expected, more vertical integration appears to be associated with higher product quality.


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Author Biographies

Marta Fernández-Olmos, Universidad de Zaragoza

Dep. de Economía y Empresa

Jorge Rosell-Martínez, Universidad de Zaragoza

Dep. de Economía y Empresa

Manuel A. Espitia-Escuer, Universidad de Zaragoza

Dep. de Economía y Empresa


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