ENDOGENOUS FLEXIBILITY IN THE FLEXIBLE MANUFACTURING SYSTEM

Toshihiro Matsumura and Daisuke Shimizu

Bulletin of Economic Research, 2015, vol. 67, issue 1, 1-13

Abstract: type="main">

We investigate the flexible manufacturing system (FMS) by using the spatial price discrimination framework of Pal. The degree of flexibility when producing variants can be increased by increasing the investment or production cost and is endogenously determined. Our result is that private incentives for increasing flexibility are excessive from a social welfare perspective.

Date: 2015
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