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Technology Choice and Market Structure: Strategic Aspects of Flexible Manufacturing

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Author Info
Norman, George
Thisse, Jacques-Francois

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Abstract

This paper shows that the adoption of flexible manufacturing techniques by firms leads to a tougher price regime. However, consumers may not benefit since the tougher regime deters entry. Flexible manufacturing's ability to deter entry is moderated by two factors: non-prohibitive costs of re-anchoring flexible manufacturing processes and the possibility that entrants choose to produce niche products using designated technologies rather than adopt flexible manufacturing. Market preemption that deters entry will be characterized by excessive product variety. Alternatively, flexible manufacturers may prefer to accommodate entry by small-scale, niche firms. Moreover, ownership matters in determining equilibrium product configurations. Copyright 1999 by Blackwell Publishing Ltd

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Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 47 (1999)
Issue (Month): 3 (September)
Pages: 345-72
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Handle: RePEc:bla:jindec:v:47:y:1999:i:3:p:345-72

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Brander, James A & Eaton, Jonathan, 1984. "Product Line Rivalry," American Economic Review, American Economic Association, vol. 74(3), pages 323-34, June. [Downloadable!] (restricted)
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  2. MacLeod, W B & Norman, G & Thisse, J-F, 1987. "Competition, Tacit Collusion and Free Entry," Economic Journal, Royal Economic Society, vol. 97(385), pages 189-98, March. [Downloadable!] (restricted)
  3. James D. Reitzes & David T. Levy, 1995. "Price Discrimination and Mergers," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 427-36, May. [Downloadable!] (restricted)
  4. Thisse, Jacques-Francois & Vives, Xavier, 1988. "On the Strategic Choice of Spatial Price Policy," American Economic Review, American Economic Association, vol. 78(1), pages 122-37, March. [Downloadable!] (restricted)
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  5. Eaton, B Curtis & Schmitt, Nicolas, 1994. "Flexible Manufacturing and Market Structure," American Economic Review, American Economic Association, vol. 84(4), pages 875-88, September. [Downloadable!] (restricted)
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  6. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring. [Downloadable!] (restricted)
  7. MacLeod, W.B. & Norman, G. & Thisse, J.-F., 1988. "Price discrimination and equilibrium in monopolistic competition," International Journal of Industrial Organization, Elsevier, vol. 6(4), pages 429-446. [Downloadable!] (restricted)
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  8. Chang, Myong-Hun, 1993. "Flexible Manufacturing, Uncertain Consumer Tastes, and Strategic Entry Deterrence," Journal of Industrial Economics, Blackwell Publishing, vol. 41(1), pages 77-90, March. [Downloadable!] (restricted)
  9. Kenneth L. Judd, 1985. "Credible Spatial Preemption," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 153-166, Summer. [Downloadable!] (restricted)
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  10. Eaton, B Curtis & Lipsey, Richard G, 1979. "A Comment on Location and Industrial Efficiency with Free Entry," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 447-50, August. [Downloadable!] (restricted)
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  11. B. Curtis Eaton & Myrna Holtz Wooders, 1985. "Sophisticated Entry in a Model of Spatial Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 282-297, Summer. [Downloadable!] (restricted)
  12. Judith R. Gelman & Steven C. Salop, 1983. "Judo Economics: Capacity Limitation and Coupon Competition," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 315-325, Autumn. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gilbert E. Metcalf & George Norman, 2002. "Oligopoly Deregulation in General Equilibrium: A Tax Neutralization Result," Discussion Papers Series, Department of Economics, Tufts University 0210, Department of Economics, Tufts University. [Downloadable!]
    Other versions:
  2. Ana Faria & Paul Fenn & Alistair Bruce, 2005. "Production technologies and technical efficiency: evidence from Portuguese manufacturing industry," Applied Economics, Taylor and Francis Journals, vol. 37(9), pages 1037-1046, May. [Downloadable!] (restricted)
  3. Carsten Eckel & J. Peter Neary, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Economics Series Working Papers 292, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  4. Gilbert E. Metcalf & George Norman, 2002. "Oligopoly Deregulation and the Taxation of Commodities," Discussion Papers Series, Department of Economics, Tufts University 0209, Department of Economics, Tufts University. [Downloadable!]
    Other versions:
  5. José Pontes, 2007. "Networks and firm location," The Annals of Regional Science, Springer, vol. 41(4), pages 897-909, December. [Downloadable!] (restricted)
    Other versions:
    • José Pedro Pontes, 2006. "Networks and Firm Location," Working Papers 2006/09, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  6. Noriaki Matsushima & Tomomichi Mizuno, 2009. "Input specificity and product differentiation," ISER Discussion Paper 0745, Institute of Social and Economic Research, Osaka University. [Downloadable!]
  7. Weiss, Christoph, 2001. "Flexibility And Competition In U.S. Food Manufacturing Firms: Are Firms Too Inflexible?," 2001 Annual meeting, August 5-8, Chicago, IL 20596, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  8. George Norman, 2000. "The Relative Advantages of Flexible versus Designated Manufacturing Technologies," Discussion Papers Series, Department of Economics, Tufts University 0019, Department of Economics, Tufts University. [Downloadable!]
  9. Carsten Eckel, 2005. "International Trade, Flexible Manufacturing and Outsourcing," cege – Center for European, Governance and Economic Development Research Discussion Papers 45, cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany).. [Downloadable!]
  10. Daisuke Shimizu & Toshihiro Matsumura, 2003. "Equilibria for circular spatial Cournot markets," Economics Bulletin, Economics Bulletin, vol. 18(1), pages 1-9. [Downloadable!]
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