Firm-asymmetry and strategic outsourcing

Cao, Jiyun and Mukherjee, Arijit and Sinha, Uday Bhanu (2017) Firm-asymmetry and strategic outsourcing. International Review of Economics and Finance, 53 . pp. 16-24. ISSN 1059-0560

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Abstract

In contrast to the conventional wisdom, we show that a final goods producer may outsource input production to an outside supplier even if the final goods producer possesses a superior input-production technology compared to the outside supplier. Such an outsourcing may reduce consumer surplus and social welfare. We also show that, in the presence of outsourcing, innovation by the firm doing outsourcing to reduce the cost of in-house input production and to reduce the input coefficient in the final goods production may have significantly different implications for the consumers and the society.

Item Type: Article
RIS ID: https://nottingham-repository.worktribe.com/output/888009
Keywords: Outsourcing; Consumer surplus; Welfare
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1016/j.iref.2017.10.008
Depositing User: Eprints, Support
Date Deposited: 11 Oct 2017 13:02
Last Modified: 04 May 2020 19:12
URI: http://eprints.nottingham.ac.uk/id/eprint/47200

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