Assortative Outsourcing with Exit

Date

2018

Authors

Bakhtiari, Sasan

Journal Title

Journal ISSN

Volume Title

Publisher

Berkeley Electronic Press

Abstract

A general framework is presented that incorporates dynamics and heterogeneity among both upstream suppliers and downstream producers to mimic the exit strategy of Hirschman (1970) in building vertical relations. An assortative matching develops between producers and suppliers based on their level of efficiency, which leads to an increase in the aggregate industrial productivity but also makes the distribution of firms more dispersed. Further experiments suggest that the nature of outsourcing relations is impacted in certain ways by business cycles and technological advancements.

Description

Keywords

outsourcing, productivity, search friction, exit strategy, business cycle

Citation

Source

The BE Journal in Theoretical Economics

Type

Journal article

Book Title

Entity type

Access Statement

Open Access

License Rights

DOI

10.1515/bejte-2014-0063

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