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

María José Gil‐Moltó and Joanna Poyago‐Theotoky
Authors registered in the RePEc Author Service: Maria Jose Gil Molto and Joanna Poyago-Theotoky

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.

Date: 2008
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