Are You being Served? A General-Equilibrium Analysis of Flexibility in Production
until further notice
Number of pages
SourceJournal of Economics, 72, 1, (2000), pp. 19-43
Article / Letter to editor
Display more detailsDisplay less details
Journal of Economics
SubjectInternationalisering van Europa
In this paper firms may deviate from standard product specifications by investing in flexible production. In a two-sector general-equilibrium model that features consumer preferences with a desire for customization and in which the fixed cost of manufacturing production depend on the extent of flexibility chosen, we find that flexibility in production increases aggregate welfare. Moreover, we find that the symmetric equilibrium with positive (excess) profits welfare dominates the equilibrium with zero profits.
Upload full text
Use your RU credentials (u/z-number and password) to log in with SURFconext to upload a file for processing by the repository team.