Flexible vs dedicated technology adoption in the presence of a public firm
preprintposted on 14.02.2006, 12:34 by Maria Jose Gil-Molto, Joanna Poyago-Theotoky
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.
- Business and Economics