Globalisation , Productivity and Technology
نویسنده
چکیده
Recent empirical evidences show negative relationship between outsourcing and profitability. This paper provides a theoretical explanation for this phenomenon. In an oligopoly model, we show that firms earn lower profits in the outsourcing equilibrium compared to the situation where neither firm does outsourcing, and it holds irrespective of the intensity of competition. So, outsourcing creates prisoner's dilemma. We show that whether outsourcing is likely to reduce profit under more intense competition (measured by the degree of product differentiation, number of firm and the type of product market competition, viz., Cournot and Bertrand competition) is ambiguous. We further show that outsourcing may be " excessive " and will hurt overall welfare.
منابع مشابه
The impact of globalisation and trade on productivity per- formance of the Irish food manufacturing sector
Globalisation and international integration can yield efficiency gains through the promotion of competition and trade in markets for internationally traded goods. At the firm level, exposure to competitive pressures has created a necessity for firms to operate as close as possible to the technology frontier in order to survive. Furthermore, increased integration has lead to an influx of investm...
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