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Vertical product differentiation with subcontracting

  • Joaquín Andaluz

    ()

    (Department of Economic Analysis. University of Zaragoza.)

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    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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    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
    Contact details of provider: Postal: Gran via, 2 50005 Zaragoza
    Fax: 976 76 19 96
    Web page: http://www.dteconz.unizar.es/
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    1. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-72, March.
    2. 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.
    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. 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.
    5. Carmen Fillat Castejón & Julia Woerz, 2006. "Good or bad? The influence of FDI on output growth. An industry-level analysis," Documentos de Trabajo dt2006-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    6. Larramona, Gemma & Sanso, Marcos, 2006. "Migration dynamics, growth and convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 30(11), pages 2261-2279, November.
    7. Inmaculada García & José Molina & María Navarro, 2007. "How Satisfied are Spouses with their Leisure Time? Evidence from Europe," Journal of Family and Economic Issues, Springer, vol. 28(4), pages 546-565, December.
    8. Erol Taymaz & Yilmaz Kilicaslan, 2001. "Subcontracting dynamics and economic development: A study on textile and engineering industries," ERC Working Papers 0108, ERC - Economic Research Center, Middle East Technical University, revised Aug 2001.
    9. 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.
    10. Yossef Spiegel, 1993. "Horizontal Subcontracting," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 570-590, Winter.
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