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Coordination Costs, Market Size, and the Choice of Technology

Author

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  • Haiwen Zhou

    (Department of Economics, Old Dominion University, Norfolk, VA 23529, USA)

Abstract

Impact of coordination costs and market size on a firm's choice of technology is studied in a general equilibrium model in which firms engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology.

Suggested Citation

  • Haiwen Zhou, 2019. "Coordination Costs, Market Size, and the Choice of Technology," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 14(1), pages 131-148, March.
    • Handle: RePEc:fec:journl:v:14:y:2019:i:1:p:131-148
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0008-6
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    References listed on IDEAS

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    Cited by:

    1. Haiwen Zhou, 2022. "The Choice of Technology and Economic Geography," International Economic Journal, Taylor & Francis Journals, vol. 36(1), pages 1-18, January.
    2. Haiwen Zhou, 2021. "Fixed Costs and the Division of Labor," Annals of Economics and Finance, Society for AEF, vol. 22(1), pages 63-81, May.

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    More about this item

    Keywords

    division of labor; coordination efficiency; technology choice; hierarchy; market size;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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