There is an interesting new survey out on vertical integration. Francine Lafontaine and Margaret Slade's paper "Vertical Integration and Firm Boundaries: The Evidence" appears in a recent issue of the Journal of Economic Literature, Vol. XLV (September 2007), pp. 629–685. The abstract reads:
Since Ronald H. Coase's (1937) seminal paper, a rich set of theories has been developed that deal with firm boundaries in vertical or input–output structures. In the last twenty-five years, empirical evidence that can shed light on those theories also has been accumulating. We review the findings of empirical studies that have addressed two main interrelated questions: First, what types of transactions are best brought within the firm and, second, what are the consequences of vertical integration decisions for economic outcomes such as prices, quantities, investment, and profits. Throughout, we highlight areas of potential cross-fertilization and promising areas for future work.
Oliver Hart also has a new NBER working paper out, "Reference Points and the Theory of the Firm". It is based on Hart's inaugural Coase Lecture, presented at the London School of Economics in February, 2007. In it Hart argues that it has been hard to make much in the way of progress on the Coaseian theory of the firm because of the difficulty of formalizing "haggling costs". Hart puts forward an approach that tries to move things ahead using the idea of what he calls "aggrievement costs". He applies this approach to the question of whether a transaction should be placed inside a firm or in the market place.