Economics at your fingertips  

Outsourcing versus vertical integration: Ethier–Markusen meets the property-rights approach

James Markusen () and Yiqing Xie

International Journal of Economic Theory, 2014, vol. 10, issue 1, 75-90

Abstract: type="main" xml:lang="en"> Early analyses of direct investment versus outsourcing focused on the existence of knowledge-based assets, knowledge being non-rivaled and non-excludable. Ethier was the first to formally model the consequences of non-excludability for the vertical integration versus outsourcing decision. Later authors took a different approach, modeling physical capital as fully excludable but relationship-specific. This paper further develops a model with both non-excludable knowledge capital and fully excludable physical capital. Results show that vertical integration tends to be chosen when (a) the technology is relatively knowledge intensive and/or when (b) knowledge and physical capital are strong complements.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1742-7355

Access Statistics for this article

International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano

More articles in International Journal of Economic Theory from The International Society for Economic Theory
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2019-10-09
Handle: RePEc:bla:ijethy:v:10:y:2014:i:1:p:75-90