Make-or-Buy Versus Make-and-Sell: The Trade-off between Economics of Scale and Specialisation
4 Dec 2024
15:00 -16:00
Times are shown in local time.
Open to: All
Lecture Theatre 1 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Economics and Policy seminar
Speaker: Professor Markus Reisinger, Frankfurt School of Finance and Management
About the seminar topic
This paper studies the make-or-buy decisions of firms that require a common input but have different ideal input characteristics. Firms can outsource input production either to one of the firms themselves or to a third party. We show that outsourcing to a third party can occur although this party does not add value to the industry.
The rationale is that, if input contracts are incomplete, a third party balances the demands for specialisation and the benefits from economies of scale in a better way than firms do. We further find that the payoff of the third party is non-monotonic in its bargaining power. We also characterise under which conditions make-or-buy decisions are distorted from the efficient ones.
Speaker bio
Markus Reisinger is Professor of Industrial Organisation and Microeconomics at the Frankfurt School of Finance and Management since 2015. Before that, he was Professor at the WHU – Otto Beisheim School of Management. He did his PhD at University of Munich. His research interests are competition policy, 2-sided markets, vertical market structures, and bargaining.
He has published in journals such as the Journal of Political Economy, the RAND Journal of Economics, Management Science, the Journal of Financial Economics, American Economic Journal: Microeconomics, and the Journal of Economic Theory. He is an Associate Editor at the Journal of Industrial Economics.
Register
No registration required. If you have any questions about this seminar, please email Emily Brown.