IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v216y2019icp23-34.html
   My bibliography  Save this article

Local manufacturing and structural shifts in competition: Market dynamics of additive manufacturing

Author

Listed:
  • Kleer, Robin
  • Piller, Frank T.

Abstract

Additive manufacturing (AM) allows to build components and finished series products directly from 3D data, without the need for tooling or other setup cost. An often discussed, but hardly investigated opportunity of AM is to establish economical and scalable local production facilities for innovating consumers (who turn into “prosumers”). In this paper, we investigate the effect of such a local production (enabled by AM) on consumer welfare, market structure, and competitive dynamics. Doing so, we provide a new perspective on the fundamental trade-off between the instant availability of (perfectly fitting) products manufactured by and in close proximity to a consumer and the efficiency gains of realizing economies of scale by producing standard products in a central facility. We analyze AM from the perspective of the established theories of user innovation and spatial competition. Building on two game-theoretical (Hotelling) models, we show that there is scope for the improvement of consumer welfare arising from local production by consumer producers. Our analysis allows us to make a number of propositions concerning the effects of AM on market structure when adopted by local users, and to identify the specific conditions of these shifts.

Suggested Citation

  • Kleer, Robin & Piller, Frank T., 2019. "Local manufacturing and structural shifts in competition: Market dynamics of additive manufacturing," International Journal of Production Economics, Elsevier, vol. 216(C), pages 23-34.
  • Handle: RePEc:eee:proeco:v:216:y:2019:i:c:p:23-34
    DOI: 10.1016/j.ijpe.2019.04.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319301422
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ijpe.2019.04.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bogers, Marcel & Hadar, Ronen & Bilberg, Arne, 2016. "Additive manufacturing for consumer-centric business models: Implications for supply chains in consumer goods manufacturing," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 225-239.
    2. Kats, A. & Thisse, J-F, 1989. "Spatial Oligopolies With Uniform Delivered Pricing," LIDAM Discussion Papers CORE 1989003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Joachim Henkel & Eric von Hippel, 2005. "Welfare Implications of User Innovation," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 73-87, January.
    4. Berman, Barry, 2012. "3-D printing: The new industrial revolution," Business Horizons, Elsevier, vol. 55(2), pages 155-162.
    5. Daniel Buhr, 2017. "What about Welfare 4.0?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(04), pages 15-24, December.
    6. Christoph H. Loch & Christian Terwiesch & Stefan Thomke, 2001. "Parallel and Sequential Testing of Design Alternatives," Management Science, INFORMS, vol. 47(5), pages 663-678, May.
    7. Carliss Baldwin & Eric von Hippel, 2011. "Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation," Organization Science, INFORMS, vol. 22(6), pages 1399-1417, December.
    8. Schniederjans, Dara G., 2017. "Adoption of 3D-printing technologies in manufacturing: A survey analysis," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 287-298.
    9. Von Hippel, Eric, 1978. "A customer-active paradigm for industrial product idea generation," Research Policy, Elsevier, vol. 7(3), pages 240-266, July.
    10. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    11. Baldwin, Carliss & Hienerth, Christoph & von Hippel, Eric, 2006. "How user innovations become commercial products: A theoretical investigation and case study," Research Policy, Elsevier, vol. 35(9), pages 1291-1313, November.
    12. Hyysalo, Sampsa & Juntunen, Jouni K. & Freeman, Stephanie, 2013. "User innovation in sustainable home energy technologies," Energy Policy, Elsevier, vol. 55(C), pages 490-500.
    13. Geoffrey Heal, 1980. "Spatial Structure in the Retail Trade: A Study in Product Differentiation with Increasing Returns," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 565-583, Autumn.
    14. Glen L. Urban & Eric von Hippel, 1988. "Lead User Analyses for the Development of New Industrial Products," Management Science, INFORMS, vol. 34(5), pages 569-582, May.
    15. Chekurov, Sergei & Metsä-Kortelainen, Sini & Salmi, Mika & Roda, Irene & Jussila, Ari, 2018. "The perceived value of additively manufactured digital spare parts in industry: An empirical investigation," International Journal of Production Economics, Elsevier, vol. 205(C), pages 87-97.
    16. Eaton, B Curtis & Schmitt, Nicolas, 1994. "Flexible Manufacturing and Market Structure," American Economic Review, American Economic Association, vol. 84(4), pages 875-888, September.
    17. Jan Holmström & Matthias Holweg & Siavash H. Khajavi & Jouni Partanen, 2016. "The direct digital manufacturing (r)evolution: definition of a research agenda," Operations Management Research, Springer, vol. 9(1), pages 1-10, June.
    18. Eric von Hippel, 1994. ""Sticky Information" and the Locus of Problem Solving: Implications for Innovation," Management Science, INFORMS, vol. 40(4), pages 429-439, April.
    19. Haefliger, Stefan & Jäger, Peter & von Krogh, Georg, 2010. "Under the radar: Industry entry by user entrepreneurs," Research Policy, Elsevier, vol. 39(9), pages 1198-1213, November.
    20. Silberston, Aubrey, 1972. "Economies of Scale in Theory and Practice," Economic Journal, Royal Economic Society, vol. 82(325), pages 369-391, Supplemen.
    21. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    22. Jiang, Ruth & Kleer, Robin & Piller, Frank T., 2017. "Predicting the future of additive manufacturing: A Delphi study on economic and societal implications of 3D printing for 2030," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 84-97.
    23. Hartl, Richard F. & Kort, Peter M., 2017. "Possible market entry of a firm with an additive manufacturing technology," International Journal of Production Economics, Elsevier, vol. 194(C), pages 190-199.
    24. Mellor, Stephen & Hao, Liang & Zhang, David, 2014. "Additive manufacturing: A framework for implementation," International Journal of Production Economics, Elsevier, vol. 149(C), pages 194-201.
    25. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    26. Gary D. Eppen, 1979. "Note--Effects of Centralization on Expected Costs in a Multi-Location Newsboy Problem," Management Science, INFORMS, vol. 25(5), pages 498-501, May.
    27. Simón Teitel & George J. Stigler & Charles P. Kindleberger, 1974. "Economies Of Scale And Size Of Plant: The Evidence And The Implications For The Developing Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 13(2), pages 92-115, December.
    28. Eric von Hippel & Georg von Krogh, 2003. "Open Source Software and the “Private-Collective” Innovation Model: Issues for Organization Science," Organization Science, INFORMS, vol. 14(2), pages 209-223, April.
    29. Baumers, Martin & Dickens, Phill & Tuck, Chris & Hague, Richard, 2016. "The cost of additive manufacturing: machine productivity, economies of scale and technology-push," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 193-201.
    30. Stefan H. Thomke, 1998. "Managing Experimentation in the Design of New Products," Management Science, INFORMS, vol. 44(6), pages 743-762, June.
    31. Weller, Christian & Kleer, Robin & Piller, Frank T., 2015. "Economic implications of 3D printing: Market structure models in light of additive manufacturing revisited," International Journal of Production Economics, Elsevier, vol. 164(C), pages 43-56.
    32. Rayna, Thierry & Striukova, Ludmila, 2016. "From rapid prototyping to home fabrication: How 3D printing is changing business model innovation," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 214-224.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Loske, Dominik & Klumpp, Matthias, 2020. "Simulating the impact of digitalization on retail logistics efficiency," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Blecker, Thorsten & Ringle, Christian M. (ed.), Data Science and Innovation in Supply Chain Management: How Data Transforms the Value Chain. Proceedings of the Hamburg International Conference of Lo, volume 29, pages 77-111, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    2. Chaudhuri, Atanu & Datta, Partha Priya & Fernandes, Kiran J. & Xiong, Yu, 2021. "Optimal pricing strategies for manufacturing-as-a service platforms to ensure business sustainability," International Journal of Production Economics, Elsevier, vol. 234(C).
    3. Peng, Yu & Lu, Qian & Wu, Xue & Zhao, Yueru & Xiao, Yue, 2020. "Dynamics of Hotelling triopoly model with bounded rationality," Applied Mathematics and Computation, Elsevier, vol. 373(C).
    4. Harm-Jan Steenhuis & Xin Fang & Tolga Ulusemre, 2020. "Global Diffusion of Innovation during the Fourth Industrial Revolution: The Case of Additive Manufacturing or 3D Printing," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-34, February.
    5. Naudé, Wim, 2019. "Three Varieties of Africa’s Industrial Future," IZA Discussion Papers 12678, Institute of Labor Economics (IZA).
    6. Abeliansky, Ana Lucia & Martínez-Zarzoso, Inmaculada & Prettner, Klaus, 2020. "3D printing, international trade, and FDI," Economic Modelling, Elsevier, vol. 85(C), pages 288-306.
    7. Sun, Luoyi & Hua, Guowei & Cheng, T.C.E. & Wang, Yixiao, 2020. "How to price 3D-printed products? Pricing strategy for 3D printing platforms," International Journal of Production Economics, Elsevier, vol. 226(C).
    8. Naudé, Wim, 2020. "Industrialization under Medieval Conditions? Global Development after COVID-19," GLO Discussion Paper Series 704, Global Labor Organization (GLO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Culot, Giovanna & Orzes, Guido & Sartor, Marco & Nassimbeni, Guido, 2020. "The future of manufacturing: A Delphi-based scenario analysis on Industry 4.0," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    2. Holzmann, Patrick & Breitenecker, Robert J. & Schwarz, Erich J. & Gregori, Patrick, 2020. "Business model design for novel technologies in nascent industries: An investigation of 3D printing service providers," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    3. Naghshineh, Bardia & Ribeiro, André & Jacinto, Celeste & Carvalho, Helena, 2021. "Social impacts of additive manufacturing: A stakeholder-driven framework," Technological Forecasting and Social Change, Elsevier, vol. 164(C).
    4. Beltagui, Ahmad & Kunz, Nathan & Gold, Stefan, 2020. "The role of 3D printing and open design on adoption of socially sustainable supply chain innovation," International Journal of Production Economics, Elsevier, vol. 221(C).
    5. Jiang, Ruth & Kleer, Robin & Piller, Frank T., 2017. "Predicting the future of additive manufacturing: A Delphi study on economic and societal implications of 3D printing for 2030," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 84-97.
    6. Yeh, Ching-Chiang & Chen, Yi-Fan, 2018. "Critical success factors for adoption of 3D printing," Technological Forecasting and Social Change, Elsevier, vol. 132(C), pages 209-216.
    7. Caviggioli, Federico & Ughetto, Elisa, 2019. "A bibliometric analysis of the research dealing with the impact of additive manufacturing on industry, business and society," International Journal of Production Economics, Elsevier, vol. 208(C), pages 254-268.
    8. Candi, Marina & Beltagui, Ahmad, 2019. "Effective use of 3D printing in the innovation process," Technovation, Elsevier, vol. 80, pages 63-73.
    9. Abeliansky, Ana Lucia & Martínez-Zarzoso, Inmaculada & Prettner, Klaus, 2020. "3D printing, international trade, and FDI," Economic Modelling, Elsevier, vol. 85(C), pages 288-306.
    10. Yang, Yiran & Li, Lin, 2018. "Cost modeling and analysis for Mask Image Projection Stereolithography additive manufacturing: Simultaneous production with mixed geometries," International Journal of Production Economics, Elsevier, vol. 206(C), pages 146-158.
    11. Bonnín Roca, Jaime & Vaishnav, Parth & Morgan, Granger M. & Fuchs, Erica & Mendonça, Joana, 2021. "Technology Forgiveness: Why emerging technologies differ in their resilience to institutional instability," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    12. Mariani, Marcello & Borghi, Matteo, 2019. "Industry 4.0: A bibliometric review of its managerial intellectual structure and potential evolution in the service industries," Technological Forecasting and Social Change, Elsevier, vol. 149(C).
    13. Despeisse, M. & Baumers, M. & Brown, P. & Charnley, F. & Ford, S.J. & Garmulewicz, A. & Knowles, S. & Minshall, T.H.W. & Mortara, L. & Reed-Tsochas, F.P. & Rowley, J., 2017. "Unlocking value for a circular economy through 3D printing: A research agenda," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 75-84.
    14. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2008. "Mass Customization vs. Mass Production: Variety and Price Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 204-217, August.
    15. Beltagui, Ahmad & Sesis, Achilleas & Stylos, Nikolaos, 2021. "A bricolage perspective on democratising innovation: The case of 3D printing in makerspaces," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    16. Birtchnell, Thomas & Böhme, Tillmann & Gorkin, Robert, 2017. "3D printing and the third mission: The university in the materialization of intellectual capital," Technological Forecasting and Social Change, Elsevier, vol. 123(C), pages 240-249.
    17. Kapetaniou, Chrystalla & Rieple, Alison & Pilkington, Alan & Frandsen, Thomas & Pisano, Paola, 2018. "Building the layers of a new manufacturing taxonomy: How 3D printing is creating a new landscape of production eco-systems and competitive dynamics," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 22-35.
    18. Wang, Lili & Jiang, Shan & Zhang, Shiyun, 2020. "Mapping technological trajectories and exploring knowledge sources: A case study of 3D printing technologies," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    19. Rayna, Thierry & Striukova, Ludmila, 2021. "Assessing the effect of 3D printing technologies on entrepreneurship: An exploratory study," Technological Forecasting and Social Change, Elsevier, vol. 164(C).
    20. Oo, Pyayt P. & Allison, Thomas H. & Sahaym, Arvin & Juasrikul, Sakdipon, 2019. "User entrepreneurs' multiple identities and crowdfunding performance: Effects through product innovativeness, perceived passion, and need similarity," Journal of Business Venturing, Elsevier, vol. 34(5), pages 1-1.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:216:y:2019:i:c:p:23-34. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/ijpe .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.