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Capacity Commitment versus Flexibility

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  • Boyer, Marcel
  • Moreaux, Michel

Abstract

We show how technological flexibility choices and equilibrium configurations (both simultaneous and sequential duopoly) depend on six industry characteristics. Low market volatility combined with intermediate market size favors inflexible technologies; large values of either volatility or size favor flexible technologies; low or intermediate values of both favor the coexistence of flexible and inflexible technologies. The possibility of a flexibility trap exists in industries of low volatility and intermediate size. Entry prevention can sometimes be achieved by inflexible technologies or flexible technologies, depending on the industry characteristics. Copyright (c) 1997 Massachusetts Institute of Technology.

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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 63.

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Date of creation: 1996
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Publication status: Published in Journal of Economics and Management Strategy, vol.�6, 1997, p.�347-376.
Handle: RePEc:ide:wpaper:723

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