This paper proposes a theory of competition and customization. When firms allocate their production to both custom-made and standardized products, the fraction of sales from the former will increase in the face of increased competition. Recent surveys conducted by the World Bank on Chinese firms provide a rare direct measure of customization that allows us to test the above-mentioned prediction. We find empirical results consistent with the prediction.
Customization, Competition, Manufacturing, Spatial competition
Behavioral Economics | Economics
Journal of Economic Behavior and Organization
HSU, Wen-Tai; LU, Yi; and NG, Travis.
Does Market Competition Lead to Customization?. (2014). Journal of Economic Behavior and Organization. 106, 10-28. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1639
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