Integration versus Outsourcing in Industry Equilibrium

Clicks: 7
ID: 298053
2002
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Abstract
We develop an equilibrium model of industrial structure in which the organization of firms is endogenous. Differentiated consumer products can be produced either by vertically integrated firms or by pairs of specialized companies. Production of each variety of consumer good requires a specialized component. Vertically integrated firms can manufacture the components they need, but they face a relatively high cost of governance. Specialized firms can produce at lower cost, but search for partners is costly, and input suppliers face a potential holdup problem. We study the determinants of the equilibrium mode of organization when inputs are fully or partially specialized.
Reference Key
openalex_W3125971667 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Gene M. Grossman, E. Helpman
Journal the quarterly journal of economics
Year 2002
DOI
10.1162/003355302753399454
URL
Keywords Keywords not found

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