Duality in an Industry with Fluctuating Demand

Waka Cheung and Yew-Kwang Ng ()

No 37-07, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: A perfect-competition model is developed to analyze duality in specialization and technology such as in the men’s clothing industry, an industry with highly seasonal nature of the business cycle. We show that when the market fluctuation is large enough, some firms will specialize in one good with the advantage of static efficiency, while other firms will generalize in multi-variety production as a means of self- insurance. The specialized firms mainly satisfy the stable component of market demand, while the generalized firms satisfy only the variable components of demands. Relative to the specialized firms, the generalized firms have a smaller firm size and a lower degree of vertical division of labor within the firm, and use the technology with more flexible specialization but less capital-labor ratio.

Keywords: flexible specialization; vertical specialization; duality; mechanization (search for similar items in EconPapers)
JEL-codes: D23 D41 L22 L25 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2007
New Economics Papers: this item is included in nep-cse
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Citations: View citations in EconPapers (2)

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Journal Article: Duality in an Industry with Fluctuating Demand (2007)
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