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Vertical product differentiation with subcontracting

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  • Joaqu�n Andaluz

    (Department of Economic Analysis. University of Zaragoza.)

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.

Suggested Citation

  • Joaqu�n Andaluz, 2008. "Vertical product differentiation with subcontracting," Documentos de Trabajo dt2008-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    • Handle: RePEc:zar:wpaper:dt2008-01
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    References listed on IDEAS

    as
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    Cited by:

    1. Lyu, Yuanzhen & Shuai, Jie, 2017. "Mixed duopoly with foreign firm and subcontracting," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 58-68.
    2. Ching‐Chih Tseng & Wen‐Jung Liang & Kuang‐Cheng Andy Wang, 2010. "Spatial agglomeration with vertical differentiation," Papers in Regional Science, Wiley Blackwell, vol. 89(4), pages 841-858, November.
    3. Jianbo Zhu & Qianqian Shi & Peng Wu & Zhaohan Sheng & Xiangyu Wang, 2018. "Achieving Economically Sustainable Subcontracting through the Hotelling Model by Considering the Spillover Effect," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    4. Ralph M. Braid, 2014. "Search costs decrease prices in a model of spatial competition," Papers in Regional Science, Wiley Blackwell, vol. 93(1), pages 125-139, March.

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    More about this item

    Keywords

    Subcontracting; Vertical Product Differentiation; Spatial Competition;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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