Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems
Publication
, Journal Article
Taylor, CR; Wiggins, SN
Published in: American Economic Review
September 1, 1997
Two fundamentally different subcontracting systems arise as distinct solutions to the quality control problem facing an input buyer. The "American" system involves competitive bidding on each contract, large orders, and inspections. The "Japanese" system involves repeat purchases from a supplier who earns a premium, small orders, and no inspections. Both systems may coexist as local solutions, but the global optimum is determined by the ratio of set-up to inspection costs. This suggests that the adoption of flexible manufacturing equipment and rising product complexity may be responsible for the shift from the American to the Japanese system observed in many industries. (JEL L14, L15, and L22).
Duke Scholars
Published In
American Economic Review
ISSN
0002-8282
Publication Date
September 1, 1997
Volume
87
Issue
4
Start / End Page
598 / 618
Related Subject Headings
- Economics
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 14 Economics
Citation
APA
Chicago
ICMJE
MLA
NLM
Taylor, C. R., & Wiggins, S. N. (1997). Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems. American Economic Review, 87(4), 598–618.
Taylor, C. R., and S. N. Wiggins. “Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems.” American Economic Review 87, no. 4 (September 1, 1997): 598–618.
Taylor CR, Wiggins SN. Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems. American Economic Review. 1997 Sep 1;87(4):598–618.
Taylor, C. R., and S. N. Wiggins. “Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems.” American Economic Review, vol. 87, no. 4, Sept. 1997, pp. 598–618.
Taylor CR, Wiggins SN. Competition or Compensation: Supplier Incentives under the American and Japanese Subcontracting Systems. American Economic Review. 1997 Sep 1;87(4):598–618.
Published In
American Economic Review
ISSN
0002-8282
Publication Date
September 1, 1997
Volume
87
Issue
4
Start / End Page
598 / 618
Related Subject Headings
- Economics
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 14 Economics