Vertical product differentiation with subcontracting*

Joaquin Andaluz

Papers in Regional Science, 2009, vol. 88, issue 4, 785-798

Abstract: Abstract The paper examines the effects of subcontracting on vertical product differentiation in a spatial competition model. It is shown that the level of differentiation is determined by the consignor's bargaining power and the ratio of the transport rates between the final product and the subcontracted input. Furthermore, the paper finds that part of the results obtained under horizontal product differentiation are not reproduced in a vertical product context. Resumen Este artículo examina los efectos de la subcontratación en la diferenciación de producto vertical bajo un modelo de competencia espacial. Se muestra que el nivel de diferenciación está determinado por el poder de negociación del remitente y la relación de las tarifas de transporte entre el producto final y el insumo subcontratado. Además, el artículo muestra que parte de los resultados obtenidos bajo una diferenciación de producto horizontal no ocurren en un contexto de producto vertical.

Date: 2009
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1111/j.1435-5957.2009.00230.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:88:y:2009:i:4:p:785-798

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