Vertical Integration Versus Outsourcing in Industry Equilibrium

Bin Wang
Additional contact information
Bin Wang: China Center for Economic Research

Microeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: We study the determinants of the extent of in-house vertical integration and of outsourcing in foreign countries. Potential suppliers must make a relationship-specific investment in order to serve each prospective customer. Such investments are governed by imperfect contracts. A final-good producer can manufacture components for it, but the per-unit cost is higher than for specialized suppliers. We consider how the size of the cost differential, the trade costs of components, the relative costs of searching in south country for final producers, the relative cost of customizing inputs affect the organization of industry protection.

Keywords: Outsourcing; Vertical Integration; Customization; Search Cost (search for similar items in EconPapers)
JEL-codes: F23 J21 (search for similar items in EconPapers)
Date: 2006-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.eaber.org/node/22007 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 301 [REDIRECT LOOP] Moved Permanently (http://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007 [301 Moved Permanently]--> https://www.eaber.org/node/22007)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eab:microe:22007

Access Statistics for this paper

More papers in Microeconomics Working Papers from East Asian Bureau of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Shiro Armstrong ().