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Title: A Note on 'Strategic Choices of Flexible Production
Technologies and Welfare Implications'
Author(s): Sudheer Gupta Volume: 46 (3) Issue: September 1998 Pages: 403 Abstract: This note corrects certain errors in welfare calculations and graphs of a paper by Röller and Tombak [1990]. The corrections necessitate a reinterpretation 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 difference in producers' and total surplus between (DE, DE) and (FMS, FMS) states is not as large as depicted by the authors. Download the Note from the Journal's Notes & Comments page. [Previous Issue] [Previous
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