Outsourcing Under Incomplete Information
Tarun Kabiraj and
Uday Sinha ()
Working Papers from eSocialSciences
The Author considers outsourcing decision of a firm in a Cournot duopoly with incomplete information. There is incomplete information about the production technology of one firm. It is shown that outsourcing can occur as outcomes of a separating or pooling perfect Bayesian equilibrium, although it is not profitable under complete information. Thus, the paper shows that asymmetric information can itself be a reason for outsourcing. It further shows that under outsourcing equilibrium consumers gain, producers as a whole loose, but the overall welfare falls.
Keywords: Outsourcing; incomplete information; Bayesian Cournot; signalling and pooling equilibrium; welfare analysis; outsourcing decision; firm; information; production; technology. (search for similar items in EconPapers)
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Journal Article: Outsourcing under incomplete information (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ess:wpaper:id:12217
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