Boonman,H.J.Hagspiel,V.Kort,Peter2025-02-012025-02-012015-07-01Boonman, H J, Hagspiel, V & Kort, P 2015, 'Dedicated vs flexible production technology : Strategic capacity investment choice ', European Journal of Operational Research, vol. 244, pp. 141-152. https://doi.org/10.1016/j.ejor.2015.01.0070377-2217ORCID: /0000-0001-5973-1981/work/5061786810.1016/j.ejor.2015.01.007https://hdl.handle.net/20.500.14602/64649This paper studies the optimal investment strategies of an incumbent and a potential entrant that can both choose between a product flexible and dedicated technology, in a two-product market characterized by uncertain demand. The product flexible production technology has certain advantages, especially when the economic environment is uncertain. On the other hand, the dedicated production technology allows a firm to commit to production quantities. This gives strategic advantages, which can outweigh the ‘value of flexibility’. It turns out that both firms prefer, for some scenarios, the dedicated production technology. However, we find that in a game with sequential technology choices, both firms investing dedicated, will not be an equilibrium. Especially when the economic environment is more uncertain, the incumbent overinvests in product flexible capacity to force the entrant to choose the dedicated technology. Then, the incumbent is the only firm with the product flexible production technology, which results in a high payoff.enginfo:eu-repo/semantics/restrictedAccessFlexible manufacturing systemsStrategic capacity investmentCommitment valueDemand uncertaintySDG 9 - Industry, Innovation, and InfrastructureArticleGeneral rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. - Users may download and print one copy of any publication from the public portal for the purpose of private study or research. - You may not further distribute the material or use it for any profit-making activity or commercial gain - You may freely distribute the URL identifying the publication in the public portal" Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim.https://www.scopus.com/pages/publications/84930473075962280211https://research.tilburguniversity.edu/en/publications/91770936-d34f-4716-b62c-8d26193aad6f(c) Universiteit van TilburgBoonman, H.J.Hagspiel, V.Kort, Peter§0000-0001-5973-1981