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Complementary Inputs, Mutual Outsourcing, and Supplier Encroachment

Chrysovalantou Milliou & Konstantinos Serfes

The Journal of Industrial Economics2025https://doi.org/10.1111/joie.12419article
AJG 3ABDC A*
Weight
0.37

Abstract

Final goods are typically produced using multiple complementary inputs. We examine the incentives and implications of supplier encroachment incorporating this fact and allowing for the possibility of mutual outsourcing between the encroached supplier and the incumbent. We show that mutual outsourcing can occur when both firms are present in the final good market. We also show that, unlike the single input case, the supplier refrains from encroaching when mutual outsourcing results in high wholesale prices and that encroachment can benefit the incumbent by generating input sales. Finally, we show that nonlinear contracts play a significant role for encroachment.

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https://doi.org/https://doi.org/10.1111/joie.12419

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@article{chrysovalantou2025,
  title        = {{Complementary Inputs, Mutual Outsourcing, and Supplier Encroachment}},
  author       = {Chrysovalantou Milliou & Konstantinos Serfes},
  journal      = {The Journal of Industrial Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/joie.12419},
}

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Complementary Inputs, Mutual Outsourcing, and Supplier Encroachment

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.