Leahy, Dermot and Montagna, Catia (2015) Economising, Strategising and the Vertical Boundaries of the Firm. University of Aberdeen Business School, Discussion Paper in Economics 15-5. Working Paper. SSRN.

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Abstract

We bridge the organisational economics and industrial economics literatures on the vertical boundaries of the firm by contextualising the transaction cost approach to the make-or-buy decision within an oligopolistic market structure. Firms invest in the quality of the intermediate resulting in the endogenous determination of the price of the intermediate and marginal production cost of the final good. We highlight new strategic incentives to outsource/vertically integrate and show that firm asymmetries can emerge endogenously, with firms choosing different modes of operation, even when they are ex-ante identical. We apply our model to a number of different international trading setups.

Item Type:	Monograph (Working Paper)
Keywords:	Oligopoly; Outsourcing; Vertical Integration; Trade Liberalisation;
Academic Unit:	Faculty of Social Sciences > Economics, Finance and Accounting
Item ID:	9152
Depositing User:	Dermot Leahy
Date Deposited:	16 Jan 2018 17:29
Publisher:	SSRN
URI:
Use Licence:	This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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