Erratum to: Adoption of Flexible Technologies in an Evolutionary Environment

Abstract

In this paper we study the problem of the endogenous choice of productive technology when the level of demand is uncertain. Firms can choose either a “flexible”, which allows them to vary the cost structure, or a “rigid” technology, which in periods of high demand is more efficient. We build an evolutionary model in which firms tend to imitate the more rewarding technology choice. We characterize stable distributions of technology choices, showing under what conditions firms of asymmetric sizes can coexist in the market. We also consider the case where switching between technologies is costly.