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Flexible vs Dedicated Technology Adoption in the Presence of a Public Firm

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Abstract

We study firms' adoption of flexible versus dedicated technologies in the context of a mixed versus a private duopoly with product differentiation. The flexible technology allows a firm to become multiproduct or multimarket without bearing additional costs. We find that a configuration where both firms adopt flexible technologies is more likely to arise in equilibrium in the private duopoly. A similar result occurs when both firms use a dedicated technology in the case of either almost independent products or products that are close substitutes. Privatization of the public firm is socially beneficial only in limited circumstances.

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  • Maria Jose Gil-Molto & Joanna Poyago-Theotoky, 2006. "Flexible vs Dedicated Technology Adoption in the Presence of a Public Firm," Discussion Paper Series 2006_1, Department of Economics, Loughborough University, revised Jan 2006.
    • Handle: RePEc:lbo:lbowps:2006_1
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    More about this item

    Keywords

    Flexible Technology; Privatization; Public Firm; Mixed Duopoly.;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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