Abstract
In a vertical chain in which two rivals invest before contracting with one of two competing suppliers, partial vertical integration may create hold-up problems for the
rival. We develop an experiment to test this theoretical prediction in two setups, in which suppliers can either pre-commit ex ante to appropriating part of the joint profit,
or degrade ex post the support they provide to their customer. Our experimental results confirm that vertical integration creates hold-up problems in both setups. However,
we observe more departures from theory in the second one. Bounded rationality and social preferences provide a rationale for these departures.
JEL Classication: C91, D90, L13, L41, L42.