Outsourcing versus vertical integration: Ethier–Markusen meets the property-rights approach
type="main" xml:lang="en"> <title type="main">Abstract</title> <p>Early analyses of direct investment versus outsourcing focused on the existence of knowledge-based assets, knowledge being non-rivaled and non-excludable. Ethier was the first to formally model the consequences of non-excludability for the vertical integration versus outsourcing decision. Later authors took a different approach, modeling physical capital as fully excludable but relationship-specific. This paper further develops a model with both non-excludable knowledge capital and fully excludable physical capital. Results show that vertical integration tends to be chosen when (a) the technology is relatively knowledge intensive and/or when (b) knowledge and physical capital are strong complements. </section>
Year of publication: |
2014
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Authors: | Markusen, James R. ; Xie, Yiqing |
Published in: |
International Journal of Economic Theory. - The International Society for Economic Theory, ISSN 1742-7355. - Vol. 10.2014, 1, p. 75-90
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Publisher: |
The International Society for Economic Theory |
Saved in:
Online Resource
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