| Sumario: | A commentary on Paul Milgrom and John Roberts's “The Economics of Modern Manufacturing: Technology, Strategy, and Organization,” which appeared in The American Economic Review, vol. 80, no. 3, June 1990, pp. 511-28. The way that Milgrom and Roberts propose to resolve the problem concerning the movement of prices involves mathematical errors that invalidate the central theorems of their paper. Additional significant assumptions concerning trends in the price elasticity of demand are needed to produce Milgrom and Roberts's desired results. This is because the possibility of an exogenous increase in demand and the increase in demand associated with offering more frequently updated products allow the possibility of a fall in price elasticity, which would lead to an incentive to raise prices rather than to lower them.
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