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| Author: | Subramaniam, V. |
| Title: | Efficient sourcing and debt financing in imperfect product markets |
| Journal: | Management Science
1998 : SEP, VOL. 44:9, p. 1167-1178 |
| Index terms: | MANAGEMENT DEBT FINANCING PRODUCTS |
| Language: | eng |
| Abstract: | Supplier relations play an important role in determining a firm's product market strategy and position, by affecting the cost and quality of the product produced by the firm. These relations are especially significant because the cost of purchased materials for an average firm is more than half its total sales. In this paper, the author models the adverse incentives of a firm that sources from a competitive supplier industry. It is shown that a firm's propensity to behave opportunistically towards its suppliers raises the firm's input costs by decreasing the number of suppliers servicing it. |
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