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Outsourcing Induced by Strategic Competition Author info | Abstract | Publisher info | Download info | Related research | Statistics Yutian Chen (Dept. of Economics, SUNY-Stony Brook)
Pradeep Dubey (Dept. of Economics, SUNY-Stony Brook)
Debapriya Sen (Dept. of Economics, SUNY-Stony Brook)
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We show that intermediate goods can be sourced to firms on the "outside" (that do not compete in the final product market), even when there are no economies of scale or cost advantages for these firms. What drives the phenomenon is that "inside" firms, by accepting such orders, incur the disadvantage of becoming Stackelberg followers in the ensuing competition to sell the final product. Thus they have incentive to quote high provider prices to ward off future competitors, driving the latter to source outside.
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Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number
1589.
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Length: 21 pages
Date of creation: Nov 2006Date of revision:
Handle: RePEc:cwl:cwldpp:1589Contact details of provider: Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA Phone: (203) 432-3702 Fax: (203) 432-6167 Web page: http://cowles.econ.yale.edu/ More information through EDIRC
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Keywords: Intermediate goods ; Outsourcing ; Cournot duopoly ; Stackelberg duopoly ; Other versions of this item:
Paper Chen, Yutian & Dubey, Pradeep & Sen, Debapriya, 2009.
"Outsourcing induced by strategic competition ,"
MPRA Paper
14899, University Library of Munich, Germany.
[Downloadable!] Yutian Chen & Pradeep Dubey & Debapriya Sen, 2006.
"Outsourcing Induced by Strategic Competition ,"
Levine's Bibliography
321307000000000674, UCLA Department of Economics.
[Downloadable!] Find related papers by JEL classification: D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports :
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Pierce, Andrea & Sen, Debapriya, 2009.
"Outsourcing versus technology transfer: Hotelling meets Stackelberg ,"
MPRA Paper
15673, University Library of Munich, Germany.
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