Outsourcing and Vertical Integration in a Competitive Industry
AbstractWe develop a partial equilibrium, perfectly competitive framework of a (potentially) vertically integrated industry. There are three types of firms: upstream firms that use primary factors to produce an intermediate; downstream firms that use primary factors and intermediates to produce a final good; and vertically integrated firms that do both. We establish conditions under which vertically integrated firms exist and outsource (part of) the production of the intermediate input. We study the changes in industry configurations resulting from changes in costs and demand.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18534.
Date of creation: 30 Oct 2009
Date of revision:
Competitive Industry; Vertical Integration; Outsourcing;
Other versions of this item:
- Federico Ciliberto & John C. Panzar, 2011. "Outsourcing and Vertical Integration in a Competitive Industry," Southern Economic Journal, Southern Economic Association, vol. 77(4), pages 885-900, April.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-COM-2009-11-14 (Industrial Competition)
- NEP-CSE-2009-11-14 (Economics of Strategic Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Román Fossati, 2012. "Outsourcing versus vertical integration: A dynamic model of industry equilibrium," Working Papers 2012-07, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
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