Ciliberto, Federico and Panzar, John (2009): Outsourcing and Vertical Integration in a Competitive Industry. Published in: Southern Economic Journal , Vol. 77, No. 4 (1. April 2011): pp. 885-900.
This is the latest version of this item.
Download (228kB) | Preview
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:||07. May 2012 14:45|
|Last Modified:||20. Feb 2013 20:17|
William J. Baumol, John C. Panzar and Robert D. Willig, Contestable Markets and the Theory of Industry Structure, New York, Harcourt Brace Jovanovich, 1982.
Curtis Eaton and S.Q. Lemche, “The Geometry of Supply, Demand, and Competitive Market Structure with Economies of Scope,” American Economic Review, Volume 81, Issue 4, September 1991.
Oliver Hart and John Moore, "Incomplete Contracts and Renegotiation," Econometrica, Vol. 56, No. 4 (Jul., 1988), pp. 755-785.
Glenn MacDonald and Alan Slivinski, "The Simple Analytics of Competitive Equilibrium with Multiproduct Firms," American Economic Review, Vol. 77, Issue 5, December 1987.
John C. Panzar and Robert D. Willig, "Economies of Scope," American Economic Review, Vol. 71, No. 2, May 1981, pp. 268-272.
Martin Perry, "Vertical Integration," Handbook of Industrial Organization, 1989, pages 185-255
Daniel F. Spulber, Regulation and Markets, The MIT Press, 1989.
G. Stigler, “The Division of Labor is Limited by the Extent of the Market,” Journal of Political Economy, Vol. 56, N. 3, June 1951, pages 129-141.
Williamson, O., 1985, The Economic Institutions of Capitalism: Firms, Markets and Vertical Contracting, (Free Press, New York).
Available Versions of this Item
Outsourcing and Vertical Integration in a Competitive Industry. (deposited 11. Nov 2009 00:12)
- Outsourcing and Vertical Integration in a Competitive Industry. (deposited 07. May 2012 14:45) [Currently Displayed]