Duality in an Industry with Fluctuating Demand
AbstractA perfect-competition model is developed to analyze duality in specialization and technology such as in the menâ€™s clothing industry, an industry with highly seasonal nature of the business cycle. We show that when the market fluctuation is large enough, some firms will specialize in one good with the advantage of static efficiency, while other firms will generalize in multi-variety production as a means of self- insurance. The specialized firms mainly satisfy the stable component of market demand, while the generalized firms satisfy only the variable components of demands. Relative to the specialized firms, the generalized firms have a smaller firm size and a lower degree of vertical division of labor within the firm, and use the technology with more flexible specialization but less capital-labor ratio.
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Bibliographic InfoPaper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 37-07.
Length: 19 pages
Date of creation: 2007
Date of revision:
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Postal: Department of Economics, Monash University, Victoria 3800, Australia
Web page: http://www.buseco.monash.edu.au/eco/
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Other versions of this item:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
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