Working papers and Works in progress

I propose a mechanism for the coexistence of vertical integration and outsourcing within an industry. In a monopolistically competitive model with incomplete contracts, final-good producers under either organizational form combine labor and differentiated inputs to produce fixed capital. Since its unit cost depends on the industry price index, distinct zero-profit conditions can hold, sustaining a mixed free-entry equilibrium. The forms differ in fixed-capital cost per unit of contribution to the price index; this ranking determines comparative statics and whether local stability is possible. I derive a sufficient condition ensuring stability whenever the mixed equilibrium exists. In numerical parameterizations using empirically standard elasticities of substitution, the condition holds throughout the admissible range of vertical-linkage intensity. Within the stable region, larger markets raise the integrated share without changing output prices or supplier bargaining terms. Relative firm size depends on governance costs and upstream bargaining share, so the model imposes no uniform ranking.

This paper quantifies the balance sheet consequences of ransomware attacks on European firms. We integrate data regarding ransomware incidents, spanning the period 2020 to 2024, with Orbis financial accounts for a comprehensive panel of EU firms from 2017 to 2024. We document that targeted firms are larger, more productive, and more capital intensive; conditional on size, they also exhibit stronger liquidity and solvency prior to the event. Employing a doubly robust staggered difference-in-differences estimator, we identify a sharp liquidity contraction in the year of the attack: the quick ratio falls driven by an increase in current liabilities. Overall, our evidence suggests that ransomware operates chiefly as a short-run working-capital shock, pushing firms toward greater reliance on trade credit and short-term bridge financing to cover immediate response and recovery expenditures.