Strategic Second Sourcing by Multinationals

  title={Strategic Second Sourcing by Multinationals},
  author={Jay Pil Choi},
Multinationals often serve foreign markets by producing domestically and exporting as well as by investing directly in foreign production facilities. We argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities -committing to a second source allows the firm to keep average cost low while at the same time increasing its marginal cost. The increase in marginal cost softens product… CONTINUE READING

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