Competitive manufacturing with fluctuating demand and diverse technology: Mathematical proofs and illuminations on industry output-flexibility
AbstractI present an original model of competitive manufacturing with fluctuating demand and diverse technology with mathematical proofs. I discuss Aranoff's output-flexibility indicator, E(AC)-LRMC. I use the model to compute Aranoff's output-flexibility indicator to measure industry output-flexibility. I argue that a measure of industry output-flexibility is [beta]L(Q2 - Q1)/E(Q) I tie the demand-side discussion with the cost-side and show the degree of industry output-flexibility that will emerge under welfare and profit-maximizing pricing rules. I perform comparative statics of changes in technology, of demand, and of frequency of the high-peak state.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 28 (2011)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/30411
Capacity planning and investment Game theory Demand fluctuations Output flexibility Equilibrium Technology choice Cost curves Competitive manufacturing Marginal cost pricing Short-run average cost curve;
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