This paper uses two versions of a vertical product differentiation model with price competition to investigate how strategic behavior between rival firms influences which organizational production mode each firm adopts: that is, either vertical integration or outsourcing. We show that not only a symmetric configuration, where both high- and low-quality firms outsource, but also an asymmetric configuration, where the high-quality firm produces in-house whereas the low-quality firm outsources, are acceptable as a subgame-perfect equilibrium outcome. We explore the implications of these results in light of the recent slump in business of Japanese electronics enterprises in the flat-panel television industry.

中文翻译：

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战略外包和质量选择：垂直整合模式是否可持续？

本文使用具有价格竞争的垂直产品差异化模型的两个版本来研究竞争对手之间的战略行为如何影响每个公司采用的组织生产模式：即垂直整合或外包。我们表明，不仅高质量和低质量公司外包的对称配置，而且高质量公司内部生产而低质量公司外包的不对称配置都可以作为子博弈 -完美的均衡结果。鉴于近期日本电子企业在平板电视行业的业务下滑，我们探讨了这些结果的影响。