The optimum size of a producer service firm facing uncertain demand

D. Phillips*, A. D. MacPherson, B. Lentnek

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

In this paper we present a theory of optimum size and number of clients for a producer service firm performing maintenance and repair services for clients in the manufacturing sector. The theory holds that scale economies vary directly with the level of contact requirements for service delivery. This is illustrated by a model of a monopoly repair specialist in which frequency of break-down (and therefore client demand for service) is stochastic. Comparative statics are used to draw testable hypotheses from the model which, if extended to a multisite case, may serve as a portion of a general model of producer service location.

Original languageEnglish
Pages (from-to)129-141
Number of pages13
JournalEnvironment and Planning A: Economy and Space
Volume30
Issue number1
Publication statusPublished - Jan 1998
Externally publishedYes

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