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| Author: | Cachon, G.P. Harker, P.T. |
| Title: | Competition and outsourcing with scale economies |
| Journal: | Management Science
2002 : OCT, VOL. 48:10, p. 1314-1333 |
| Index terms: | Competition Economies of scale Operations management Outsourcing |
| Language: | eng |
| Abstract: | Scale economies are commonplace in operations, yet because of analytical challenges, relatively little is known about how firms should compete in their presence. This paper presents a model of competition between two firms that face scale economies (i.e. each firm's cost per unit of demand is decreasing in demand). A general framework is used, which incorporates competition between two service providers with price- and time-sensitive demand (a queuing game) and competition between two retailers with fixed-ordering costs and price-sensitive consumers (an Economic Order Quantity game). |
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