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

29 Pages Posted: 17 May 2006

See all articles by Maria Jose Gil-Molto

Maria Jose Gil-Molto

University of Leicester - Department of Economics

Joanna Poyago-Theotoky

La Trobe University

Date Written: January 2006

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.

Keywords: Flexible Technology, Privatization, Public Firm, Mixed Duopoly

JEL Classification: L32, L33, L13, O33

Suggested Citation

Gil-Molto, Maria Jose and Poyago-Theotoky, Joanna, Flexible vs Dedicated Technology Adoption in the Presence of a Public Firm (January 2006). Available at SSRN: https://ssrn.com/abstract=901827 or http://dx.doi.org/10.2139/ssrn.901827

Maria Jose Gil-Molto

University of Leicester - Department of Economics ( email )

University Road
Leicester, LE1 7RH
United Kingdom

Joanna Poyago-Theotoky (Contact Author)

La Trobe University ( email )

Melbourne, Victoria 3086
Australia

HOME PAGE: http://poyago-theotoky.com

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