EconPapers    
Economics at your fingertips  
 

The Effect of Salvage Market on Strategic Technology Choice and Capacity Investment Decision of Firm under Demand Uncertainty

Mohammad Ali Kashefi ()

Iranian Economic Review (IER), 2013, vol. 18, issue 1, 25-67

Abstract: This paper examines the effect of salvage market on strategic technology choice (flexible vs. inflexible) and capacity investment (general, specific and unified components) decision of firms. A four-stage game theoretic model applies to capture strategic decisions of two competitors. In solving optimization problems of the model, we reach intractable equations that enforce us to employ numerical studies. Findings show that with symmetric parameterization there is a unique symmetric Nash equilibrium in which both firms choose inflexible technology while applying asymmetric parameters has the potential to form two types of equilibrium: 1. Both firms chooses inflexible technology or 2. Only one firm chooses flexible technology. Moreover it is shown that there is a specific unified cost threshold that could shift the equilibrium of the game. Finally we discuss on the case that there is no equilibrium and mention some managerial implications of the model.

Keywords: Salvage Market; Modular and Unified Production Process; Product Postponement; Demand Uncertainty; Investment Decision; Operation Management. (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
ftp://80.66.179.253/eut/journl/20131-2.pdf (application/pdf)

Related works:
Journal Article: Effect of salvage market on strategic technology choice and capacity investment decision of firm under demand uncertainty (2016) Downloads
Working Paper: The Effect of Salvage Market on Strategic Technology Choice and Capacity Investment Decision of Firm under Demand Uncertainty (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:18:y:2013:i:1:p:25

Access Statistics for this article

Iranian Economic Review (IER) is currently edited by Dr.Hossien Abbasinejad

More articles in Iranian Economic Review (IER) from Faculty of Economics,University of Tehran.Tehran,Iran Contact information at EDIRC.
Bibliographic data for series maintained by [z.rahimalipour] ().

 
Page updated 2020-10-21
Handle: RePEc:eut:journl:v:18:y:2013:i:1:p:25