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Title:Strategic Outsourcing Revisited PDF Logo
Authors:Buehler, Stefan
Haucap, Justus
Issue Date:2003
Series/Report no.:Diskussionspapier / Helmut-Schmidt-Universität Hamburg, Fächergruppe Volkswirtschaftslehre 15
Abstract:This paper analyzes a sequential game where firms decide about outsourcing the production of a non-specific input good to an imperfectly competitive input market. We apply the taxonomy of business strategies introduced by Fudenberg and Tirole (1984) to characterize the different equilibria. We find that outsourcing generally softens competition in the final product market. If firms anticipate the impact of their outsourcing decisions on input prices, there may be equilibria where firms outsource so as to collude or to raise rivals? costs. We illustrate our analysis using a linear Cournot model.
JEL:D43
L24
L23
L22
Persistent Identifier of the first edition:urn:nbn:de:gbv:705-opus-1486
Document Type:Working Paper
Appears in Collections:Diskussionspapiere, Fächergruppe VWL, Helmut-Schmidt-Universität

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