Flexible Technology and Informative Experiments

Susanna Sallstrom

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: Innovative firms have an incentive to invest in a flexible technology to employ more sophisticated experimentation strategies. Flexibility in terms of ability to differentiate and to alter quality at no cost is shown to solve the inadequate learning problem in a model with discontinuous demand. Experimentation with a flexible technology induces a bias in product selection towards more varieties and products of higher qualities. Over time products will become closer substitutes.

Keywords: Experimentation; flexible technology; vertical differentiation (search for similar items in EconPapers)
JEL-codes: C99 D24 D42 D83 L10 (search for similar items in EconPapers)
Date: 1998-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9821

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