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Frontiers of Economics in China

Front. Econ. China    2019, Vol. 14 Issue (1) : 131-148
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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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.
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