Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5077883 | International Journal of Industrial Organization | 2015 | 12 Pages |
Abstract
We study technology adoption in a dynamic model of price competition. Adoption involves disruption costs and learning by doing. Because of disruption costs, the adopting firm begins in a market disadvantage, which may persist if its rival captures the customers that the adopting firm needs to learn the technology. The prospect of future rents by the rival results in: (i) a failure to adopt socially efficient technologies; (ii) an equilibrium preference for technologies that are learned faster but have lower social value; and (iii) more technologies being adopted if more firms enter the market.
Keywords
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Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Carlos J. Pérez, Carlos J. Ponce,