Learning by supplying and competition threat

Yi-Fan Chen (), Alireza Naghavi and Shin-Kun Peng ()
Additional contact information
Yi-Fan Chen: Singapore Management University
Shin-Kun Peng: Academia Sinica

Review of World Economics (Weltwirtschaftliches Archiv), 2021, vol. 157, issue 1, No 5, 148 pages

Abstract: Abstract This study proposes a model of learning by supplying in an international outsourcing framework, where the supplier of a relationship-specific input can reverse engineer and become a competitor to its partner in the final goods market. Transmitting knowledge to a more capable supplier therefore creates competitive threat despite the benefits it brings within an outsourcing relationship. In particular, in markets with less differentiated products and for standard inputs that require less knowledge to be shared, choosing an intermediate capability level supplier prompts a strategic expansion of output to deter supplier entry in the final goods market, resulting in higher profits and welfare. A highly capable supplier is instead accommodated as a rival and is a source of royalty income when the relationship-specific input embeds more knowledge about the final product and when the competing varieties are differentiated.

Keywords: International outsourcing; Supplier heterogeneity; Competitive threat; Reverse engineering; Strategic predation; Technological capability; Learning by supplying; Royalty payment; Knowledge intensity (search for similar items in EconPapers)
JEL-codes: D23 F12 F23 L13 L22 L24 O34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10290-020-00386-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Learning by supplying and Competition Threat (2019)
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:spr:weltar:v:157:y:2021:i:1:d:10.1007_s10290-020-00386-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10290/PS2

DOI: 10.1007/s10290-020-00386-y

Access Statistics for this article

Review of World Economics (Weltwirtschaftliches Archiv) is currently edited by Paul Bergin, Holger Görg, Cédric Tille and Gerald Willmann

More articles in Review of World Economics (Weltwirtschaftliches Archiv) from Springer, Institut für Weltwirtschaft (Kiel Institute for the World Economy) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().