I study the interaction between optimal procurement and outsourcing of production in small industries. First, two …. Then the buyer designs the procurement mechanism and sellers who outsourced production subcontract with their respective …

For a repeated procurement problem, we compare two stylized negotiating cultures which differ in how the buyer uses an … entrant to exert pressure on the incumbent resembling U.S. style and Japanese style procurement. In each period, the suppliers … are privately informed about their production cost, but only the incumbent can influence the buyer s procurement mechanism …