Efficient organization of production: Nested versus horizontal outsourcing

Arbeitspapier

The authors characterize equilibrium and efficient modes of production by comparing nested (vertical) outsourcing with horizontal outsourcing. Nested outsourcing is found to be inefficient unless the cost of monitoring outsourced production lines increases sharply with the number of subcontractors and not only with the number of outsourced components. They characterize a market failure in which nested outsourcing is selected when the case dictates that horizontal outsourcing is the efficient outsourcing mode. This failure occurs at an intermediate range of the costs of monitoring outsourcing to several subcontractors.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 09-9

Classification and Topics

• Classification: Wirtschaft ; Contracting Out; Joint Ventures; Technology Licensing
• Subject: outsourcing ; subcontracting ; nested outsourcing ; horizontal outsourcing ; efficient organization of outsourcing ; Outsourcing ; Lieferant ; Wirtschaftliche Effizienz ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Shy, Oz ; Stenbacka, Rune
• Event: Veröffentlichung
• (who): Federal Reserve Bank of Boston
• (where): Boston, MA
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/55598
• Last update: 10.03.2025, 11:44 AM CET