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Firm-asymmetry and strategic outsourcing

Cao, Jiyun; Mukherjee, Arijit; Sinha, Uday Bhanu


Jiyun Cao

Uday Bhanu Sinha


In contrast to the conventional wisdom, we show that a final goods producer may outsource input production to an outside supplier even if the final goods producer possesses a superior input-production technology compared to the outside supplier. Such an outsourcing may reduce consumer surplus and social welfare. We also show that, in the presence of outsourcing, innovation by the firm doing outsourcing to reduce the cost of in-house input production and to reduce the input coefficient in the final goods production may have significantly different implications for the consumers and the society.


Cao, J., Mukherjee, A., & Sinha, U. B. (in press). Firm-asymmetry and strategic outsourcing. International Review of Economics and Finance, 53,

Journal Article Type Article
Acceptance Date Oct 10, 2017
Online Publication Date Oct 16, 2017
Deposit Date Oct 11, 2017
Publicly Available Date Oct 17, 2018
Journal International Review of Economics and Finance
Print ISSN 1059-0560
Electronic ISSN 1059-0560
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 53
Keywords Outsourcing; Consumer surplus; Welfare
Public URL
Publisher URL


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