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Choice of Flexible Production Technologies Under Strategic Delegation

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  • Bárcena Ruiz, Juan Carlos
  • Olaizola Ortega, María Norma

Abstract

This work analyzes a managerial delegation model in which firms can choose between a flexible production technology which allows them to produce two different products and a dedicated production technology which limits production to only one product. We analyze whether the incentives to adopt the flexible technology are smaller or greater in a managerial delegation model than under strict profit maximization. We obtain that the asymmetric equilibrium in which only one firm adopts the flexible technology can be sustained under strategic delegation but not under strict profit maximization when products are substitutes. We extend the analysis to consider welfare implications.

Suggested Citation

  • Bárcena Ruiz, Juan Carlos & Olaizola Ortega, María Norma, 2004. "Choice of Flexible Production Technologies Under Strategic Delegation," IKERLANAK info:eu-repo/grantAgreeme, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    • Handle: RePEc:ehu:ikerla:6491
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    1. Kim, Taekwon & Roller, Lars-Hendrik & Tombak, Mihkel M, 1992. "Strategic Choice of Flexible Production Technologies and Welfare Implications: Addendum et Corrigendum," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 233-235, June.
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    16. Bárcena Ruiz, Juan Carlos & Olaizola Ortega, María Norma, 2004. "Cost-Saving production technologies and strategic delegation," IKERLANAK 2004-12, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
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    1. Juan Carlos Bárcena‐Ruiz & Norma Olaizola, 2006. "Cost‐Saving Production Technologies And Strategic Delegation," Australian Economic Papers, Wiley Blackwell, vol. 45(2), pages 141-157, June.

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