Choice of flexible production technologies under strategic delegation
AbstractThis paper analyzes a managerial delegation model in which firms can choose between a flexible production technology which allows them to produce two different products and a dedicated production technology which limits production to only one product. We analyze whether the incentives to adopt the flexible technology are smaller or greater in a managerial delegation model than under strict profit maximization. We obtain that the asymmetric equilibrium in which only one firm adopts the flexible technology can be sustained under strategic delegation but not under strict profit maximization when products are substitutes. We extend the analysis to consider welfare implications.
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Bibliographic InfoArticle provided by Elsevier in its journal Japan and the World Economy.
Volume (Year): 20 (2008)
Issue (Month): 3 (August)
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Web page: http://www.elsevier.com/locate/inca/505557
Other versions of this item:
- Bárcena Ruiz, Juan Carlos & Olaizola Ortega, María Norma, 2004. "Choice of Flexible Production Technologies Under Strategic Delegation," IKERLANAK 2004-13, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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