This paper analyzes a sequential game where firms decide about outsourcing the production of a non-specific input good … Tirole (1984) to characterize the different equilibria. We find that outsourcing generally softens competition in the final … product market. If firms anticipate the impact of their outsourcing decisions on input prices, there may be equilibria where …

both crucial for the emergence of outsourcing. The supplier purposefully avoids industry pro.t maximization to enlarge its …

contracts is crucial for the emergence of outsourcing. The supplier purposefully avoids industry profit maximization to enlarge …

This paper analyzes a sequential game where firms decide about outsourcing the production of a non-specific input good … Tirole (1984) to characterize the different equilibria and find that outsourcing generally softens competition in the final … product market. If firms anticipate the impact of their outsourcing decisions on input prices, there may be equilibria where …