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The Acquisition of Fisher Body By General Motors
R. H. Coase
The Journal of Law & Economics
Vol. 43, No. 1 (April 2000), pp. 15-32
Published by: The University of Chicago Press for The Booth School of Business, University of Chicago and The University of Chicago Law School
Stable URL: http://www.jstor.org/stable/10.1086/467446
Page Count: 18
You can always find the topics here!Topics: Motors, Corporations, Automobile manufacturers, Automobiles, Fisheries law, Vertical integration, Business structures, Stock prices, Contracts, Customers
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Abstract It is commonly said that in 1926 General Motors was led to acquire its supplier of automobile bodies, Fisher Body, because Fisher Body held up General Motors. It is claimed that Fisher Body did this by locating its body plants far away from the General Motors assembly plants and by adapting inefficient methods of production, thus increasing both the cost of producing bidies and the profits of Fisher Body under its cost‐plus contract. This tale is factually incorrect. What General Motors acquired in 1926 was the 40 percent of the shares of Fisher Body that it did not already own. Furthermore, Fisher Body did not locate its plants far away from the General Motors assembly plants. It is also most implausible, for many reasons, that the Fisher brothers would have used inefficient methods of production. There is no evidence that a holdup occurred.
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