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Vertical product differentiation with subcontracting

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  • Joaquín Andaluz

    ()
    (Department of Economic Analysis. University of Zaragoza.)

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    Abstract

    The paper examines the effects of subcontracting on vertical product differentiation in a spatial competition model. It is shown that the level of differentiation is determined by the consignor’s bargaining power and the ratio of final product transport costs to the cost of the input contracted. Assuming that the consignor has total bargaining power, subcontracting will imply a reduction in quality and a greater difference between qualities.

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    File URL: http://www.dteconz.unizar.es/DT2008-01.pdf
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    Bibliographic Info

    Paper provided by Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza in its series Documentos de Trabajo with number dt2008-01.

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    Date of creation: Jan 2008
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    Handle: RePEc:zar:wpaper:dt2008-01

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    Postal: Gran via, 2 50005 Zaragoza
    Fax: 976 76 19 96
    Web page: http://www.dteconz.unizar.es/
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    Related research

    Keywords: Subcontracting; Vertical Product Differentiation; Spatial Competition;

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    References

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    1. Carmen F. Castejón & Julia Wörz, 2006. "Good or Bad? The Influence of FDI on Output Growth: An industry-level analysis," wiiw Working Papers 38, The Vienna Institute for International Economic Studies, wiiw.
    2. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On the nature of competition with differentiated products," CORE Discussion Papers RP -685, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Isabel Sanz Villarroya & Leandro Prados de la Escosura, 2006. "Libertad económica y convergencia en Argentina: 1875-2000," Documentos de Trabajo dt2006-04, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    4. Jesús Mur & Ana Angulo, 2005. "Model selection strategies in a spatial context," Documentos de Trabajo dt2005-06, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    5. Yossef Spiegel, 1993. "Horizontal Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 570-590, Winter.
    6. Begoña Gutiérrez Nieto & Carlos Serrano Cinca, 2006. "Factors explaining the rating of Microfinance Institutions," Documentos de Trabajo dt2006-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    7. Morton I. Kamien & Lode Li & Dov Samet, 1989. "Bertrand Competition with Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 553-567, Winter.
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