This paper examines firms' production strategies for supplying products tailored to the target country's local taste: developing a new localized variety and modifying an existing variety to fit the local taste. Adopting the concept of the flexible technology in industrial organization theory,...

This paper considers a competition between two multinationals (U, J) who compete in a third market (K). The multinationals have identical cost structures, but differ in that J comes from a country that is “taste-similar†to K, and hence produces products that match more closely...