| Author: | Belleflamme, P. |
| Title: | Oligopolistic competition, IT use for product differentiation and the productivity paradox |
| Journal: | International Journal of Industrial Organization
2001 : JAN, VOL. 19:1-2, p. 227-248 |
| Index terms: | COMPUTERS PRODUCTIVITY INVESTMENT |
| Language: | eng |
| Abstract: | Empirical studies suggest that the huge investment in information technologies (IT) of the past two decades has led to no significant increase in productivity; this phenomenon is known as the 'productivity paradox'. It has been argued that the paradox might result from oligopolistic competition: because of strategic interaction, each individual firm might find it profitable to invest in cost-reducing IT, but total investment might then be excessive from the industry's point of view. The author confirms this view and strengthens it by allowing IT investment to be also devoted to product differentiation, which makes the productivity paradox more likely. The emergence of Web-based electronic commerce provides an illustration of the forces identified in the model. |
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