‘Make-or-Buy' in International Oligopoly and the Role of Competitive Pressure

Dermot Leahy and Catia Montagna

Discussion Papers from University of Nottingham, GEP

Abstract: We study how competitive pressure influences the make-or-buy decision that oligopolistic firms face between producing an intermediate component in-house or purchasing it from a domestic supplier. We model outsourcing as a bilateral relationship in which the supplier undertakes relationship-specific investments. A home and foreign firm compete in the home market. Firms' mode of operation decision depends on cost and strategic considerations. Competitive pressure increases firms' incentive to outsource. Consumer gains from trade liberalisation are enhanced when it leads to less outsourcing.

Keywords: Outsourcing; Vertical Integration; Trade Liberalisation; Oligopoly (search for similar items in EconPapers)
Date: 2007
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https://www.nottingham.ac.uk/gep/documents/papers/2007/07-05.pdf (application/pdf)

Related works:
Working Paper: MAKE-OR-BUY’ IN INTERNATIONAL OLIGOPOLY AND THE ROLE OF COMPETITIVE PRESSURE (2007)
Working Paper: ‘Make-or-Buy’ in International Oligopoly and the Role of Competitive Pressure (2007)
Working Paper: 'Make-or-Buy' in International Oligopoly and the Role of Competitive Pressure (2006)
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