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A Note on ‘Strategic Choice of flexible Production Technologies and Welfare Implications’
Author(s) -
Gupta Sudheer
Publication year - 1998
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00078
Subject(s) - citation , welfare , production (economics) , library science , sociology , management , computer science , political science , economics , law , microeconomics
This note corrects certain errors in welfare calculations and graphs of a paper by Roller and Tombak (JIE, 1990). The corrections necessitate a re-interpretation of some of their results. Contrary to authors' assertion (Proposition 1), consumer surplus is not always the highest in (FMS, FMS) state. Producing in both markets imposes a negative externality that grows as products become more substitutable, leading to a reduction in output levels. Secondly, corrected graphs reveal that the di erence in producers' and total surplus between (DE, DE) and (FMS, FMS) states is not as large as depicted by the authors. I thank Professor Richard Loulou for his invaluable encouragement, guidance, and support. Any errors are solely mine.