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Asymmetric spiders: Supplier heterogeneity and the organization of firms

  • Nowak, Verena
  • Schwarz, Christian
  • Suedekum, Jens

We consider a property rights model of a firm with two heterogeneous suppliers. The headquarters determine the firm's organizational structure, and we analyze which sourcing mode (outsourcing or vertical integration) is chosen for which of the asymmetric inputs. If suppliers' investment choices are strategic complements, the firm may keep the technologically more important input inside its boundaries and outsource the less important supplier. The firm also tends to keep more sophisticated inputs in-house, while choosing an external supplier organization for simpler and for low-cost components. These theoretical predictions are consistent with numerous case studies and recent empirical evidence on the internal organization of firms.

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Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 141.

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Date of creation: 2014
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Handle: RePEc:zbw:dicedp:141
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  1. Baldwin, Richard & Venables, Anthony J, 2010. "Spiders and Snakes: Offshoring and Agglomeration in the Global Economy," CEPR Discussion Papers 8163, C.E.P.R. Discussion Papers.
  2. Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers 70, C.E.P.R. Discussion Papers.
  3. Antras, Pol & Helpman, Elhanan, 2004. "Global Sourcing," Scholarly Articles 3196327, Harvard University Department of Economics.
  4. Schwarz, Christian & Suedekum, Jens, 2010. "Global Sourcing of Complex Production Processes," IZA Discussion Papers 5305, Institute for the Study of Labor (IZA).
  5. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
  6. Sergiu Hart, 2006. "Shapley Value," Discussion Paper Series dp421, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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  8. Johannes Van Biesebroeck & Lijun ZHANG, 2011. "Global sourcing of a complex good," Center for Economic Studies - Discussion papers ces11.26, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  9. Antras, Pol, 2003. "Firms, Contracts, and Trade Structure," Scholarly Articles 3196328, Harvard University Department of Economics.
  10. Kohler, Wilhelm & Smolka, Marcel, 2013. "Global sourcing and firm selection," University of Tuebingen Working Papers in Economics and Finance 63, University of Tuebingen, Faculty of Economics and Social Sciences.
  11. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  12. Defever, Fabrice & Toubal, Farid, 2011. "Productivity, Relationship-Specific Inputs and the Sourcing Modes of Multinationals," CEPR Discussion Papers 8656, C.E.P.R. Discussion Papers.
  13. Corcos, Gregory & Irac, Delphine & Mion, Giordano & Verdier, Thierry, 2009. "The Determinants of Intra-Firm Trade," CEPR Discussion Papers 7530, C.E.P.R. Discussion Papers.
  14. Costinot, Arnaud & Oldenski, Lindsay & Rauch, James, 2009. "Adaptation and the Boundary of Multinational Firms," CCES Discussion Paper Series 14, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  15. Gregory Corcos & Delphine M. Irac & Giordano Mion & Thierry Verdier, 2013. "The determinants of intrafirm trade: evidence from French firms," LSE Research Online Documents on Economics 42706, London School of Economics and Political Science, LSE Library.
  16. Wilhelm Kohler & Marcel Smolka, 2009. "Global Sourcing Decisions and Firm Productivity: Evidence from Spain," CESifo Working Paper Series 2903, CESifo Group Munich.
  17. repec:hrv:faseco:4784029 is not listed on IDEAS
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