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Observability, Commitment and Flexibility

Author

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  • Marcel Boyer
  • Armel Jacques
  • Michel Moreaux

Abstract

We show that whether observing technological choices made by competitors is possible or not has significant impacts on the equilibrium technological configurations. Depending upon the industry characteristics, the strategic value of technological flexibility may be either positive or negative, and it is sometimes better to observe than to be observed, and sometimes to be observed than to observe Nous montrons que la possibilité qu'ont, ou non, les entreprises d'observer leurs choix technologiques respectifs a des impacts significatifs sur les technologies qu'elles adopteront à l'équilibre. Selon les caractéristiques de l'industrie, la valeur stratégique de la flexibilité technologique peut être positive ou négative, et il est parfois préférable d'observer plutôt que d'être observé, parfois plus profitable d'être observé que d'observer.

Suggested Citation

  • Marcel Boyer & Armel Jacques & Michel Moreaux, 1998. "Observability, Commitment and Flexibility," CIRANO Working Papers 98s-36, CIRANO.
    • Handle: RePEc:cir:cirwor:98s-36
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    File URL: https://cirano.qc.ca/files/publications/98s-36.pdf
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    References listed on IDEAS

    as
    1. Marcel Boyer & Michel Moreaux, 1997. "Capacity Commitment versus Flexibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 347-376, June.
    2. Marcel Boyer & Armel Jacques & Michel Moreaux, 1998. "Better Observability Promotes the Adoption of More Flexible Technologies," CIRANO Working Papers 98s-38, CIRANO.
    3. Vives, Xavier, 1989. "Technological competition, uncertainty, and oligopoly," Journal of Economic Theory, Elsevier, vol. 48(2), pages 386-415, August.
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    Cited by:

    1. Boyer, M. & Jacques, A. & Moreaux, M., 1998. "Better Observability Promotes the Adoption of more Flexible Technologies," Papers 98.505, Toulouse - GREMAQ.
    2. Marcel Boyer & Armel Jacques & Michel Moreaux, 2001. "Bankruptcy Cost, Financial Structure and Technological Flexibility Choices," CIRANO Working Papers 2001s-27, CIRANO.
    3. Marcel Boyer & Armel Jacques & Michel Moreaux, 2002. "On the Relationship Between Financial Status and Investment in Technological Flexibility," CIRANO Working Papers 2002s-14, CIRANO.

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    More about this item

    Keywords

    Flexibility; observability; duopoly; Flexibilité; observabilité; duopole;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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