This study proposes to reconstruct the relations between butchers, tanners and shoemakers (three trades which were also guilds) in Bologna, a relatively large city of around 60,000 inhabitants. The three guilds were linked together by the trading of skins. The tanners bought the already flayed ox, cow and calf hides from the butchers and tanned them before selling them to the shoemakers. The leathers so produced were then used to make shoes.

While the flayed hides deteriorated rapidly in quality, the leathers lasted longer, although they too lost their value quickly once they became too dry. Both the hides and the leathers were intermediate products in the same line of production. This peculiarity, common to many goods, creates special relationships between individual firms in the different phases of the productive process. These production relationships are essentially mediated by the market: semi-manufactured goods are bought, transformed and resold, and are then subject to other transformations and transactions before finally reaching the consumer market. Such an organization of production can be replaced by the verticalization of several phases in the productive process within a single firm or conglomerate (internal organization).

Both these organizational modes of production have specific costs, as has been pointed out in the work of some economists. There are, for example, the costs of internal management – the monitoring and assessment of the performance of the sectors and phases operating within a single firm.