The Acquisition of Fisher Body

Posted: 13 Feb 2001

See all articles by R.H. Coase

R.H. Coase

University of Chicago - Law School

Abstract

It is commonly said that General Motors was led to acquire in 1926 its supplier of automobile bodies, Fisher Body, because Fisher Body held up General Motors. It is claimed that they did this by locating their body plans far away from the General Motors assembly plants and by adapting inefficient methods of production, thus increasing the cost of producing bodies, thereby increasing 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 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.

JEL Classification: N82

Suggested Citation

Coase, R.H., The Acquisition of Fisher Body. Available at SSRN: https://ssrn.com/abstract=231750

R.H. Coase (Contact Author)

University of Chicago - Law School

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