Ciliberto, Federico and Panzar, John (2009): Outsourcing and Vertical Integration in a Competitive Industry.
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We develop a partial equilibrium, perfectly competitive framework of a (potentially) vertically integrated industry. There are three types of firms: upstream firms that use primary factors to produce an intermediate; downstream firms that use primary factors and intermediates to produce a final good; and vertically integrated firms that do both. We establish conditions under which vertically integrated firms exist and outsource (part of) the production of the intermediate input. We study the changes in industry configurations resulting from changes in costs and demand.
|Item Type:||MPRA Paper|
|Original Title:||Outsourcing and Vertical Integration in a Competitive Industry|
|Keywords:||Competitive Industry, Vertical Integration, Outsourcing|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure
|Depositing User:||Federico Ciliberto|
|Date Deposited:||11. Nov 2009 00:12|
|Last Modified:||18. Feb 2013 18:12|
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