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Effects of Joint Outsourcing on Consumer Welfare

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  • Alexei Alexandrov

Abstract

This work models outsourcing under oligopolistic competition with nonlinear costs. I show that in a covered market, if each firm's marginal cost before outsourcing is lower than the industry's average cost, outsourcing leads to increased prices and decreased consumer welfare. Joint outsourcing is more profitable if the firms' equilibrium quantity produced is in the economies of scale part of their cost curve .

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  • Alexei Alexandrov, 2013. "Effects of Joint Outsourcing on Consumer Welfare," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(2), pages 187-202, July.
    • Handle: RePEc:taf:ijecbs:v:20:y:2013:i:2:p:187-202
    DOI: 10.1080/13571516.2013.795062
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    References listed on IDEAS

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    Cited by:

    1. Chang Ray-Yun & Hu Jin-Li & Lin Yan-Shu, 2018. "The Choice of Prices versus Quantities under Outsourcing," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(2), pages 1-20, July.
    2. Chen Yutian & Sen Debapriya, 2012. "Outsourcing and Downstream R&D under Economies of Scale," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-33, September.

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