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An Economic Analysis of Architecture and Coordination: Applying Ricardian Comparative Advantage to Design Costs and Locations

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Abstract

The present paper applies simple economic models to the issue of basic relationships between the choice of product architecture by customers and the choice of coordination mechanisms by firms. More specifically, an exploratory analysis will be attempted concerning how the products’ architecture is chosen, how does architecture affect products’ unit costs and functional performance, what kind of effect does consumer preference have on this, how the combinations of product architecture and coordination mechanisms (e.g., organization or market) affect product costs, what effect on this does organizational capabilities cause, and altogether, how customers’ tastes determines product architecture and coordination mechanisms simultaneously.

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  1. Faculty of Economics, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo, 113-0033, Japan

    Takahiro Fujimoto

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Fujimoto, T. An Economic Analysis of Architecture and Coordination: Applying Ricardian Comparative Advantage to Design Costs and Locations. Evolut Inst Econ Rev 9, 51–124 (2012). https://doi.org/10.14441/eier.A2012004

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