STRATEGIC OUTSOURCING UNDER ECONOMIES OF SCALE |
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| Authors: | Yutian Chen Debapriya Sen |
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| Institution: | 1. Department of Economics, California State University, California, USA;2. Department of Economics, Ryerson University, Ontario, Canada |
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| Abstract: | We show that economies of scale in upstream production can lead both the disintegrated downstream firm as well as its vertically integrated rival to outsource offshore for intermediate goods, even if offshore production has a moderate cost disadvantage compared to in‐house production of the vertically integrated firm. |
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| Keywords: | economies of scale outourcing D41 L11 L13 |
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