Vertical Relations. Recent developments and lessons for telecommunications

<jats:p>Summary: The organization of client-supplier relations is the subject of the economic theory of vertical relations. Since Ronald Coase's seminal work, this issue has been considered in connection with the boundaries of firms. This article recapitulates the main concepts used in discussing this general problem, while stressing that when specific investments are made in a context of uncertainty and incomplete contracts, an optimal a priori form of inter-firm relations does not exist. Trust between partners is therefore one of the essential factors in stabilizing long-term contractual relations. In the telecommunications sector today there is great diversity in the organization of economic relations between operators and manu- facturers. The institutional environment (regulation, industrial policy objectives and national independence considerations) has been and remains the main element in the structuring and evolution of these conflictual long-term partnerships between network operators and their main suppliers. </jats:p>