Coordination Costs, Market Size, and the Choice of Technology

Zhou, Haiwen (2017): Coordination Costs, Market Size, and the Choice of Technology.

Abstract

Impact of coordination costs and market size on a firm’s choice of technology is studied in a general equilibrium model in which firms engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology.

• Item Type: MPRA Paper
• Language: English
• Keywords: Division of labor, coordination efficiency, technology choice, hierarchy, market size
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

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