Choice of Flexible Production Technologies Under Strategic Delegation

Juan Carlos Bárcena Ruiz and Norma Olaizola ()
Authors registered in the RePEc Author Service: Juan Carlos Bárcena-Ruiz

IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I

Abstract: This work analyzes a managerial delegation model in which firms can choose between a flexible production technology which allows them to produce two different products and a dedicated production technology which limits production to only one product. We analyze whether the incentives to adopt the flexible technology are smaller or greater in a managerial delegation model than under strict profit maximization. We obtain that the asymmetric equilibrium in which only one firm adopts the flexible technology can be sustained under strategic delegation but not under strict profit maximization when products are substitutes. We extend the analysis to consider welfare implications.

Keywords: flexible production technologies; strategic delegation; social welfare; duopoly (search for similar items in EconPapers)
Date: 2004-09
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Citations: View citations in EconPapers (1)

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Journal Article: Choice of flexible production technologies under strategic delegation (2008)
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Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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