Effects of Joint Outsourcing on Consumer Welfare

Alexei Alexandrov

International Journal of the Economics of Business, 2013, vol. 20, issue 2, 187-202

Abstract: This work models outsourcing under oligopolistic competition with nonlinear costs. I show that in a covered market, if each firm's marginal cost before outsourcing is lower than the industry's average cost, outsourcing leads to increased prices and decreased consumer welfare. Joint outsourcing is more profitable if the firms' equilibrium quantity produced is in the economies of scale part of their cost curve .

Date: 2013
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DOI: 10.1080/13571516.2013.795062

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