Working papers and Works in progress

I propose a new mechanism that brings heterogeneity at equilibrium in organizational forms (vertical integration versus outsourcing) in a given industry, without necessarily requiring innate productivity differences. To do so, I present a model where final goods producers (irrespective of whether they are vertically integrated with the upstream stage or specialized in the downstream stage only) need a basket of differentiated commodities, in addition to labor, to create the fixed capital needed for production. I then show the existence of an equilibrium populated simultaneously by vertically integrated and non-integrated firms and I study the properties of such an equilibrium. The stable equilibrium is characterized by similar fixed cost requirements for integration and outsourcing.

This paper quantifies the balance sheet consequences of ransomware attacks on European firms. We integrate data regarding ransomware incidents, spanning the period 2020 to 2023, with Orbis financial accounts for a comprehensive panel of EU firms from 2017 to 2023. 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. The contraction is concentrated among incidents that culminate in data disclosure on leak sites, and coincides with an increase in other operating expenses. 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.