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Better Observability Promotes the Adoption of More Flexible Technologies

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  • Marcel Boyer
  • Armel Jacques
  • Michel Moreaux

Abstract

We study in this paper how the technological flexibility choices and equilibrium configurations depend first on the industry characteristics (demand function and cost parameters specific to the multiproduct flexible technology and to the product dedicated technologies) and, second, on the observability conditions prevailing in the industry. We show that better observability tends to promote the adoption of more flexible technologies. On étudie dans cet article comment les choix technologiques et les configurations techniques d'équilibre dépendent premièrement des caractéristiques de l'industrie (fonctions de demande et paramètres de coûts spécifiques de la technique multiproduit flexible et de la technique de production, non flexible, de chaque bien), ainsi que des conditions d'observation des choix des concurrents. On montre qu'une meilleure observabilité des choix favorise l'émergence de technologies plus flexibles.

Suggested Citation

  • Marcel Boyer & Armel Jacques & Michel Moreaux, 1998. "Better Observability Promotes the Adoption of More Flexible Technologies," CIRANO Working Papers 98s-38, CIRANO.
    • Handle: RePEc:cir:cirwor:98s-38
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    File URL: https://cirano.qc.ca/files/publications/98s-38.pdf
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    References listed on IDEAS

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    1. Eaton, B Curtis & Schmitt, Nicolas, 1994. "Flexible Manufacturing and Market Structure," American Economic Review, American Economic Association, vol. 84(4), pages 875-888, September.
    2. Boyer, M. & Jacques, A. & Moreaux, M., 1998. "Observability, Commitment and Flexibility," Papers 98.504, Toulouse - GREMAQ.
    3. W. Bentley MacLeod & Daniel Parent, 1999. "Job characteristics, wages, and the employment contract," Review, Federal Reserve Bank of St. Louis, issue May, pages 13-27.
    4. Roller, Lars-Hendrik & Tombak, Mihkel M, 1990. "Strategic Choice of Flexible Production Technologies and Welfare Implications," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 417-431, June.
    5. Marcel Boyer & Michel Moreaux, 1997. "Capacity Commitment versus Flexibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 347-376, June.
    6. Donald Gerwin, 1993. "Manufacturing Flexibility: A Strategic Perspective," Management Science, INFORMS, vol. 39(4), pages 395-410, April.
    7. Vives, Xavier, 1989. "Technological competition, uncertainty, and oligopoly," Journal of Economic Theory, Elsevier, vol. 48(2), pages 386-415, August.
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    1. Marcel Boyer & Armel Jacques & Michel Moreaux, 1998. "Observability, Commitment and Flexibility," CIRANO Working Papers 98s-36, CIRANO.

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    More about this item

    Keywords

    Flexible manufacturing technology; commitment; strategic equilibrium; Technologie flexible; engagement; équilibre stratégique;
    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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