Optimal procurement and outsourcing of production in small industries

Frank Rosar

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: I study the interaction between optimal procurement and outsourcing of production in small industries. First, two sellers decide about outsourcing. By outsourcing, a seller loses information about the costs of producing to his supplier. Then the buyer designs the procurement mechanism and sellers who outsourced production subcontract with their respective suppliers. The focal equilibrium might exhibit bilateral outsourcing although outsourcing is modeled to have no direct positive effects. When a seller is able to extract his supplier s rent ex ante, the focal equilibrium exhibits bilateral outsourcing for any distribution of production costs satisfying a regularity condition.

JEL-codes: D44 D82 L23 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-cta and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79812

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