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

María José Gil-Moltó () and Joanna Poyago-Theotoky
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María José Gil-Moltó: Department of Economics, University of Leicester, University Road, Leicester, LE1 7RH England, United Kingdom

Authors registered in the RePEc Author Service: Maria Jose Gil Molto ()

Southern Economic Journal, 2008, vol. 74, issue 4, 997-1016

Abstract: We study firms' adoption of flexible technologies in the context of a mixed versus a private duopoly with product differentiation. As opposed to a dedicated technology, a 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 almost independent or close substitute products. Privatization of the public firm is socially beneficial in limited circumstances.

JEL-codes: L32 L33 L13 O33 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:sej:ancoec:v:74:4:y:2008:p:997-1016