Strategic Outsourcing Revisited
Abstract
This paper analyzes a sequential game where firms decide about outsourcing the production of a non-specific input good to an imperfectly competitive input market. We apply the taxonomy of business strategies introduced by Fudenberg and Tirole (1984) to characterize the different equilibria. We find that outsourcing generally softens competition in the final product market. If firms anticipate the impact of their outsourcing decisions on input prices, there may be equilibria where firms outsource so as to collude or to raise rivalsâÃÂàcosts. We illustrate our analysis using a linear Cournot model.Download Info
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Paper provided by Helmut Schmidt University, Hamburg in its series Working Paper with number 15/2003.Length: 24 pages
Date of creation: 14 Jul 2003
Date of revision:
Handle: RePEc:ris:vhsuwp:2003_015
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Keywords:Other versions of this item:
- Buehler, Stefan & Haucap, Justus, 2006. "Strategic outsourcing revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 325-338, November.
- Stefan Buehler & Justus Haucap, 2003. "Strategic Outsourcing Revisited," Working Papers 0305, University of Zurich, Socioeconomic Institute.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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