A New Push on An Old Fundamental: Understanding the Patterns of Outsourcing
AbstractFor what kind of intermediate input/service do firms often go outsourcing? This paper develops a model of two-stage production in which economies of scope are central to the production of both the intermediate and final good. The model is able to explain the patterns of outsourcing from the degree of product differentiation, economies of scope, and economies of scale in production of the intermediate input relative to that of the final good. The recent surge of outsourcing activities is explained by a new push (progress in the general purpose technology, e.g., information technology) on an old fundamental (economies of scope in production).
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Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 03-08.
Length: 22 pages
Date of creation: 15 Jul 2003
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Publication status: Published: Carleton Economic Papers
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This paper has been announced in the following NEP Reports:
- NEP-ENT-2003-09-24 (Entrepreneurship)
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