Partial outsourcing, monitoring cost, and market structure
Abstract
. We investigate firms’ outsourcing decisions when production requires a large number of inputs. The novelty of our approach is that it provides a testable framework to characterize the equilibrium fraction of outsourced inputs. We demonstrate that intensified competition in a Cournot market for the final good typically enlarges the set of outsourced components relative to those produced in-house. The proportions of outsourced inputs are found...
Paper Details
Title
Partial outsourcing, monitoring cost, and market structure
Published Date
Nov 1, 2005
Volume
38
Issue
4
Pages
1173 - 1190
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