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Technology choice and market structure: strategic aspects of flexible manufacturing

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  • NORMAN, George
  • THISSE, Jacques-François

Abstract

This paper shows that the adoption of flexible manufacturing techniques by firms leads to a tougher price regime. This need not benefit consumers since the tougher regime deters entry and facilitates segmented market structures. The ability of flexible manufacturing to deter entry is moderated by two forces: non-prohibitive costs of re-anchoring flexible manufacturing processes and entrants choosing to produce niche products using designated technologies rather than to adopt flexible manufacturing. If flexible manufacturing leads to market preemption it can be expected to be characterized by excessive product variety. Alternatively, flexible manufacturers may prefer to accommodate entry by small-scale, niche firms.
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Suggested Citation

  • NORMAN, George & THISSE, Jacques-François, 1999. "Technology choice and market structure: strategic aspects of flexible manufacturing," LIDAM Reprints CORE 1414, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1414
    DOI: 10.1111/1467-6451.00104
    Note: In : The Journal of Industrial Economics, 47(3), 345-372, 1999
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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