Arya, Anil; Mittendorf, Brian; Sappington, David E. M. - In: Management Science 54 (2008) 10, pp. 1747-1758
Firms routinely decide whether to make essential inputs themselves or buy the inputs from independent suppliers. Conventional wisdom suggests that a firm will not buy an input for a price above its in-house cost of production. We show that this is not necessarily the case when a monopolistic...