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Why do Firms Engage in Multi-sourcing?

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  • Justin Yifu Lin
  • Arijit Mukherjee
  • Yingyi Tsai

Abstract

We provide an explanation for multi-sourcing, which is often found in the real world and refers to the situation where a final goods producer acquires homogenous components from different suppliers. In the presence of imitation under outsourcing, multi-sourcing helps to deter entry by the suppliers into the final goods market and enhances profitability of the outsourcing firm.

Suggested Citation

  • Justin Yifu Lin & Arijit Mukherjee & Yingyi Tsai, 2008. "Why do Firms Engage in Multi-sourcing?," Discussion Papers 08/43, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:08/43
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 2003. "Outsourcing Versus FDI in Industry Equilibrium," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 317-327, 04/05.
    2. Howard Pack & Kamal Saggi, 2023. "Vertical technology transfer via international outsourcing," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 3, pages 53-79, World Scientific Publishing Co. Pte. Ltd..
    3. Howard Pack & Kamal Saggi, 2023. "Vertical technology transfer via international outsourcing," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 3, pages 53-79, World Scientific Publishing Co. Pte. Ltd..
    4. Amy Jocelyn Glassa & Kamal Saggi, 2023. "Innovation and wage effects of international outsourcing," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 2, pages 33-52, World Scientific Publishing Co. Pte. Ltd..
    5. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    6. Amy Jocelyn Glassa & Kamal Saggi, 2023. "Innovation and wage effects of international outsourcing," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 2, pages 33-52, World Scientific Publishing Co. Pte. Ltd..
    7. Sugata Marjit & Arijit Mukherjee, 2008. "International Outsourcing and R&D: Long‐Run Implications for Consumers," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 1010-1022, November.
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