Vertical product differentiation with subcontracting

Joaquin Andaluz

Documentos de Trabajo from Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza

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 final product transport costs to the cost of the input contracted. Assuming that the consignor has total bargaining power, subcontracting will imply a reduction in quality and a greater difference between qualities.

Keywords: Subcontracting; Vertical Product Differentiation; Spatial Competition (search for similar items in EconPapers)
JEL-codes: C78 D43 L14 L22 (search for similar items in EconPapers)
Date: 2008-01
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Journal Article: Vertical product differentiation with subcontracting* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zar:wpaper:dt2008-01

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