The paper discusses the role of delegation to managers in a duopoly in which the optimal decisions upon in-house production and outsourcing may lead make and buy to coexist, namely bi-sourcing to arise at equilibrium. In the benchmark framework of quantity competition, outsourcing to an inefficient external manufacturing is shown to be strategically used under bi-sourcing with the aim to exploit market advantages induced by delegation. Strategic reasons for adopting either outsourcing or in-house production, besides leading firm's profits to increase in the cost of internal or external production, let delegation not be the optimal (unique) endogenous choice, which contrasts with previous studies. It may also cause, under sufficiently high product differentiation, a reversal of the advantage of the delegating (first-mover) firm over the non-delegating (second-mover) rival.

Managerial delegation under capacity commitment: A tale of two sources

Scrimitore Marcella;
2018

Abstract

The paper discusses the role of delegation to managers in a duopoly in which the optimal decisions upon in-house production and outsourcing may lead make and buy to coexist, namely bi-sourcing to arise at equilibrium. In the benchmark framework of quantity competition, outsourcing to an inefficient external manufacturing is shown to be strategically used under bi-sourcing with the aim to exploit market advantages induced by delegation. Strategic reasons for adopting either outsourcing or in-house production, besides leading firm's profits to increase in the cost of internal or external production, let delegation not be the optimal (unique) endogenous choice, which contrasts with previous studies. It may also cause, under sufficiently high product differentiation, a reversal of the advantage of the delegating (first-mover) firm over the non-delegating (second-mover) rival.
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11587/421388
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? 8
social impact