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Decisive factors and the economic efficiency of subcontracting

Commissariat Général à la Stratégie et à la Prospective - PARIS - 2014

If we refer to the theory of transaction costs (Coase, Chandler, and Williamson), a firm can produce goods or services itself (vertical integration) or it can subcontract. Thus what is the optimal perimeter for a firm ? We will take into account the fact that output can be domestic or international (Blanchard et alii, 2012 ; Markusen, 2002)