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Does competition lead to customization?

Wen-Tai Hsu (), Yi Lu () and Travis Ng ()

Journal of Economic Behavior & Organization, 2014, vol. 106, issue C, 10-28

Abstract: This paper proposes a theory of competition and customization. When firms allocate their production to both custom-made and standardized products, the fraction of sales from the former will increase in the face of increased competition. Recent surveys conducted by the World Bank on Chinese firms provide a rare direct measure of customization that allows us to test the above-mentioned prediction. We find empirical results consistent with the prediction.

Keywords: Customization; Competition; Manufacturing; Spatialcompetition (search for similar items in EconPapers)
JEL-codes: D43 L11 L15 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.jebo.2014.05.011

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