Are product innovation and flexible technology complements?

Abstract: "This paper revises the interdependence between flexible technology and product innovation in the context of a monopolistic firm. Previous literature argued that flexible machinery reduces the cost of incremental innovation. To take interactions beyond the fixed cost into account, we introduce a 2-period optimization model where technology, innovation and price are chosen first, then stochastic demand realizes and, finally, production is carried out. We find that flexibility increases the expected second period gain from incremental innovation in some but not all cases. Thus, the overall profit function need not be supermodular although fixed cost complementarity might be substantial. Empirical evidence from the German mechanical engineering industry suggests that fixed costs complementarity indeed does not outweigh potential adverse effects in expected operational profits." (author's abstract)

Show object

• Alternative title: Sind Produktinnovation und flexible Technologien komplementär?
• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource, 44 S.
• Language: Englisch
• Notes: Veröffentlichungsversion

References and Relationships

• Bibliographic citation: Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und politische Ökonomie ; Bd. 01-07

Classification and Topics

• Keyword: Unternehmenstheorie ; Innovation ; Flexible Fertigung ; Bilaterales Monopol ; Monopol ; Kostenfunktion ; Fixe Kosten ; Optimierung ; Theorie ; :z Geschichte 1992-1994

Contributors, Places and Time

• Event: Veröffentlichung
• (where): Berlin
• (when): 2001
• Creator: Jung, Astrid
• Contributor: Wissenschaftszentrum Berlin für Sozialforschung gGmbH

Further information

• URN: urn:nbn:de:0168-ssoar-115160
• Rights: Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.