Firms in technology markets often outsource the manufacture of core components – components that are central to product performance and comprise a substantial portion of product costs. Despite the strategic importance of core component outsourcing, there is little empirical evidence (and many conflicting opinions) about its impact on consumer demand.

We address this gap with an examination of panel data from the flat panel television industry, across key regions globally. Results from our estimation indicate that core component outsourcing reduces the firm’s ability to be on the technological frontier; this hurts demand, because our estimates suggest that consumers care about firms being on the frontier. On the other hand, such outsourcing also reduces costs. Finally, we find that outsourcing increases the intensity of competition in the marketplace. We assess these (often opposing) effects, and conduct thought experiments to quantify the performance impact of core component outsourcing.

技术市场中的公司通常将核心组件的制造外包—核心组件对产品性能至关重要，并且构成了产品成本的很大一部分。尽管核心组件外包具有重要的战略意义，但很少有经验证据（以及许多相互矛盾的观点）对其外包对消费者需求的影响。

我们通过检查全球主要地区的平板电视行业的面板数据来解决这一差距。我们估计的结果表明，核心组件外包降低了公司进入技术前沿的能力。这伤害了需求，因为我们的估计表明，消费者关心的是处于前沿的公司。另一方面，这种外包也降低了成本。最后，我们发现外包增加了市场竞争的强度。我们评估这些（通常是相反的）影响，并进行思想实验以量化核心组件外包对性能的影响。