Template-Type: ReDIF-Paper 1.0
Title:General Distorted Input Ratios in Vertical Relationships
Author-Name: Martin Peitz
Author-Email:  Martin.peitz@googlemail.com
Author-Name: Dongsoo Shin
Author-Email: dshin@scu.edu
Classification-JEL: E21, E24, J21, J22
Keywords: labor income tax; labor supply elasticity; general equilibrium; cross-country panel

Abstract: A project leader sources an input from a supporter and combines it with an input produced
in-house. The leader has private information about the project’s cost environment. We show
that if the leader can commit to the in-house input level, the input ratio is distorted upward
when the in-house input is not too costly—the in-house input is produced in excess and, thus,
partly wasted. By contrast, without the leader’s commitment to the in-house input level, the
input ratio is distorted downward when the in-house input is su¢ciently costly—the outsourced
input is produced in excess and, thus, partly wasted

Note: 
Length: 28
Creation-Date: 2018-12
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp060
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_060