Should competing original equipment manufacturers outsource procurement activities under asymmetric cost information?

This paper considers a supply chain in which two competing heterogeneous original equipment manufacturers (OEMs) outsource production to a common contract manufacturer (CM) that possesses private cost information. Along with production outsourcing, the OEMs can either purchase components by themselves and only assign the production tasks to the CM (Consignment), or delegate both the procurement and production tasks to the CM (Turnkey). The main...