. Relationship-specific investments can create appropriable quasi-rents, because they allow others to hold up the investing party in an attempt to extract a greater proportion of the joint benefits. Firms confronting such risks can eliminate them either by entering into a vertical contractual restraint (such as an exclusive dealing requirement or long- term contract) or by vertically integrating. Either solution eliminates the incentives for engaging in opportunistic behavior designed to affect the division of profits between the two firms (Klein et al. 1978). Although a lively debate has emerged over the frequency with which vertical integration will represent the preferred solution over a vertical contractual restraint, both sides agree about the potential benefits associated with some greater exercise of vertical control. Despite their differences about the likelihood that vertical exclusion will be prof- itable, post-Chicago scholars agree that vertical integration may lead to efficiencies 32 The classic example discussed in the literature is GM's 1926 acquisition of one of its component manufacturers, Fisher Body. Klein et al. (1978) argue that the shift from wooden to metal automobile bodies required Fisher Body to make a relationship-specific investment in new metal stamping technology unique to GM's cars that created the possibility that GM would act opportunistically against Fisher Body after the investment costs had already been sunk. To mitigate this risk, GM and Fisher Body entered into a long-term exclusive dealing agreement that was well designed to protect Fisher Body against opportunistic behavior by GM, but not well designed to protect GM against opportunistic behavior by Fisher Body. A dramatic increase in the demand for metal-bodied automobiles put GM in the position of being held up by Fisher Body. Unable to manage its relationship with its input supplier through contractual devices, GM was left with no choice but to vertically integrate backward into body fabrication by acquiring Fisher Body.