ENDOGENOUS FLEXIBILITY IN THE FLEXIBLE MANUFACTURING SYSTEM |
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| Authors: | Toshihiro Matsumura Daisuke Shimizu |
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| Affiliation: | 1. Institute of Social Science, the University of Tokyo, Japan;2. Faculty of Economics, Gakushuin University, Japan |
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| Abstract: | We investigate the flexible manufacturing system (FMS) by using the spatial price discrimination framework of Pal. The degree of flexibility when producing variants can be increased by increasing the investment or production cost and is endogenously determined. Our result is that private incentives for increasing flexibility are excessive from a social welfare perspective. |
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| Keywords: | FMS (flexible manufacturing system) production substitution spatial price discrimination L13 R32 |
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