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The impacts of suppliers and mutual outsourcing on organizational forms

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  • Yasuhiro Arai
  • Noriaki Matsushima

Abstract

We consider a downstream duopoly model with a monopolistic common supplier and mutual outsourcing between the two symmetric downstream firms. The market structure captures the recent procurement environment in the smartphone industry. We also incorporate managerial delegation into the duopoly model because deciding on organizational forms within a firm is critical to achieving better performance in almost all industries. There is an equilibrium in which only one of the firms delegates its downstream production to its sales manager. A delegating firm becomes less aggressive. The profits when both firms delegate can be higher than those when no firm delegates. Social welfare when both firms delegate can be smaller than that when no firm delegates. Les répercussions des fournisseurs et de l'impartition mutuelle sur les formes d'organisation. Nous examinons un modèle de duopole axé sur les effets comportant un fournisseur monopolistique commun et l'impartition mutuelle entre deux firmes symétriques en aval. La structure de marché saisit l'environnement récent d'approvisionnement au sein de l'industrie des téléphones intelligents. Nous intégrons également la délégation de responsabilités dans le modèle de duopole, car les décisions relatives aux formes d'organisation dans une entreprise sont essentielles pour réaliser un meilleur rendement dans presque toutes les industries. Il y a un équilibre où seulement une des entreprises délègue sa production en aval à ses directeurs commerciaux. Une entreprise qui délègue devient moins agressive. Les bénéfices réalisés lorsque les deux entreprises délèguent peuvent être supérieurs à ceux gagnés lorsqu'aucune entreprise ne délègue. Le bien‐être social lorsque les deux entreprises délèguent peut être inférieur au bien‐être social lorsqu'aucune entreprise ne délègue.

Suggested Citation

  • Yasuhiro Arai & Noriaki Matsushima, 2023. "The impacts of suppliers and mutual outsourcing on organizational forms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 114-132, February.
  • Handle: RePEc:wly:canjec:v:56:y:2023:i:1:p:114-132
    DOI: 10.1111/caje.12638
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    2. Yasuhiro Arai & Noriaki Matsushima, 2023. "The impacts of suppliers and mutual outsourcing on organizational forms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 114-132, February.

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