Supplier Encroachment with Complementary Inputs

Author(s):  
Chrysovalantou Milliou ◽  
Konstantinos Serfes
Keyword(s):  
2000 ◽  
Vol 90 (1) ◽  
pp. 15-29 ◽  
Author(s):  
Boyan Jovanovic ◽  
Dmitriy Stolyarov

When a production process requires two extremely complementary inputs, conventional wisdom holds that a firm would always upgrade them simultaneously. We show, however, that if upgrading each input involves a fixed cost, the firm may upgrade them at different dates, “asynchronously.” This insight helps us understand why productivity rises with the age of a plant, why investment in structures is more spiked than equipment investment, and why plants have spare capacity. The bigger point of the paper is that complementarity does not necessarily imply comovement—not even for a single decision maker. (JEL E22, O31, P11)


1986 ◽  
Vol 31 (1) ◽  
pp. 51-90
Author(s):  
Lindsay Bower

2020 ◽  
pp. 1-45 ◽  
Author(s):  
Jason T. Kerwin ◽  
Rebecca L. Thornton

This paper demonstrates the acute sensitivity of education program effectiveness to the choices of inputs and outcome measures, using a randomized evaluation of a mother-tongue literacy program. The program raises reading scores by 0.64SDs and writing scores by 0.45SDs. A reduced-cost version instead yields statistically-insignificant reading gains and some large negative effects (-0.33SDs) on advanced writing. We combine a conceptual model of education production with detailed classroom observations to examine the mechanisms driving the results; we show they could be driven by the program initially lowering productivity before raising it, and potentially by missing complementary inputs in the reduced-cost version.


2015 ◽  
Vol 24 (3) ◽  
pp. 466-475 ◽  
Author(s):  
Jean-François Hennart ◽  
Hsia Hua Sheng ◽  
Gustavo Pimenta

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