Why Do Firms Engage in Multi-Sourcing?

Arijit Mukherjee, Yingyi Tsai, Justin Yifu Lin
2008 Social Science Research Network  
We provide an explanation for multi-sourcing, which is often found in the real world and refers to the situation where a final goods producer acquires homogenous components from different suppliers. In the presence of imitation under outsourcing, multi-sourcing helps to deter entry by the suppliers into the final goods market and enhances profitability of the outsourcing firm.
doi:10.2139/ssrn.1438057 fatcat:3mqquoxhpzegngpreqstseym6e