Coordination Costs, Market Size, and the Choice of Technology

doi:10.3868/s060-008-019-0008-6

Front. Econ. China

2019, Vol. 14

Issue (1) : 131-148 https://doi.org/10.3868/s060-008-019-0008-6

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Coordination Costs, Market Size, and the Choice of Technology

Haiwen Zhou(

)

Department of Economics, Old Dominion University, Norfolk, VA 23529, USA

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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.

Keywords division of labor coordination efficiency technology choice hierarchy market size

Issue Date: 16 April 2019

Cite this article:

Haiwen Zhou. Coordination Costs, Market Size, and the Choice of Technology[J]. Front. Econ. China, 2019, 14(1): 131-148.

URL:

https://academic.hep.com.cn/fec/EN/10.3868/s060-008-019-0008-6
https://academic.hep.com.cn/fec/EN/Y2019/V14/I1/131

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