Technology Choice and Market Structure: Strategic Aspects of Flexible Manufacturing
This paper shows that the adoption of flexible manufacturing techniques by firms leads to a tougher price regime. This need not benefit consumers since the tougher regime deters entry and facilitates segmented market structures. The ability of flexible manufacturing to deter entry is moderated by two forces: non-prohibitive costs of re-anchoring flexible manufacturing processes and entrants choosing to produce niche products using designated technologies rather than to adopt flexible manufacturing. If flexible manufacturing leads to market preemption it can be expected to be characterized by excessive product variety. Alternatively, flexible manufacturers may prefer to accommodate entry by small-scale, niche firms.
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