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Capacity Commitment versus Flexibility

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  • Boyer, Marcel
  • Moreaux, Michel
Abstract
We show how technological flexibility choices and equilibrium configurations (both simultaneous and sequential duopoly) depend on six industry characteristics. Low market volatility combined with intermediate market size favors inflexible technologies; large values of either volatility or size favor flexible technologies; low or intermediate values of both favor the coexistence of flexible and inflexible technologies. The possibility of a flexibility trap exists in industries of low volatility and intermediate size. Entry prevention can sometimes be achieved by inflexible technologies or flexible technologies, depending on the industry characteristics.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Boyer, Marcel & Moreaux, Michel, 1996. "Capacity Commitment versus Flexibility," IDEI Working Papers 63, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:723
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    References listed on IDEAS

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    1. Vives Xavier, 1993. "Information, Flexibility, and Competition," Journal of the Japanese and International Economies, Elsevier, vol. 7(3), pages 219-237, September.
    2. Marcel Boyer & Michel Moreaux, 1989. "Uncertainty, Capacity and Flexibility: the Monopoly Case," Annals of Economics and Statistics, GENES, issue 15-16, pages 291-313.
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